Section 10

CHAPTER III
INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME

Incomes not included in total income.
10. In computing the total income of a previous year of any person, any income falling within
any of the following clauses shall not be included—
(1) agricultural income ;
(2) subject to the provisions of sub-section (2) of section 64, any sum received by an
individual as a member of a Hindu undivided family, where such sum has been paid
out of the income of the family, or, in the case of any impartible estate, where such
sum has been paid out of the income of the estate belonging to the family ;
(2A) in the case of a person being a partner of a firm which is separately assessed as
such, his share in the total income of the firm.
Explanation.—For the purposes of this clause, the share of a partner in the total
income of a firm separately assessed as such shall, notwithstanding anything
contained in any other law, be an amount which bears to the total income of the firm
the same proportion as the amount of his share in the profits of the firm in
accordance with the partnership deed bears to such profits ;
(3) [***]
(4) (i) in the case of a non-resident, any income by way of interest on such securities or
bonds as the Central Government may, by notification in the Official Gazette,
specify in this behalf, including income by way of premium on the redemption of
such bonds :
Provided that the Central Government shall not specify, for the purposes of this
sub-clause, such securities or bonds on or after the 1st day of June, 2002;
(ii) in the case of an individual, any income by way of interest on moneys standing
to his credit in a Non-Resident (External) Account in any bank in India in
accordance with the Foreign Exchange Management Act, 1999 (42 of 1999), and
the rules made thereunder :
Provided that such individual is a person resident outside India as defined in clause
(w) of section 2 of the said Act or is a person who has been permitted by the
Reserve Bank of India to maintain the aforesaid Account ;
(4B) in the case of an individual, being a citizen of India or a person of Indian origin,
who is a non-resident, any income from interest on such savings certificates issued
before the 1st day of June, 2002 by the Central Government as that Government
may, by notification in the Official Gazette, specify in this behalf :
Provided that the individual has subscribed to such certificates in convertible
foreign exchange remitted from a country outside India in accordance with the
provisions of the Foreign Exchange Management Act, 1999 (42 of 1999), and any
rules made thereunder.
Explanation.—For the purposes of this clause,—
(a) a person shall be deemed to be of Indian origin if he, or either of his parents
or any of his grandparents, was born in undivided India ;
(b) "convertible foreign exchange" means foreign exchange which is for the time
being treated by the Reserve Bank of India as convertible foreign exchange
for the purposes of the Foreign Exchange Management Act, 1999 (42 of
1999), and any rules made thereunder ;
(4C) any income by way of interest payable to a non-resident, not being a company, or to
a foreign company, by any Indian company or business trust in respect of monies
borrowed from a source outside India by way of issue of rupee denominated bond,
as referred to in clause (ia) of sub-section (2) of section 194LC, during the period
beginning from the 17th day of September, 2018 and ending on the 31st day of
March, 2019;
(4D)35 any income accrued or arisen to, or received by a specified fund as a result of
transfer of capital asset referred to in clause (viiab) of section 47, on a recognised
stock exchange located in any International Financial Services Centre and where the
consideration for such transaction is paid or payable in convertible foreign exchange
or as a result of transfer of securities (other than shares in a company resident in
India) or any income from securities issued by a non-resident (not being a
permanent establishment of a non-resident in India) and where such income
otherwise does not accrue or arise in India or any income from a securitisation trust
which is chargeable under the head "Profits and gains of business or profession", to
the extent such income accrued or arisen to, or is received, is attributable to units
held by non-resident (not being the permanent establishment of a non-resident in
India) 36[or is attributable to the investment division of offshore banking unit, as the
case may be,] computed in the prescribed manner.
Explanation.—For the purposes of this clause, the expression—
(a) "convertible foreign exchange" means foreign exchange which is for the time
being treated by the Reserve Bank of India as convertible foreign exchange
for the purposes of the Foreign Exchange Management Act, 1999 (42 of
1999) and the rules made thereunder;
37
[(aa) "investment division of offshore banking unit" means an investment division
of a banking unit of a non-resident located in an International Financial
Services Centre, as referred to in sub-section (1A) of section 80LA and which
has commenced its operations on or before the 31st day of March, 2024;]
(b) "manager" shall have the meaning assigned to it in clause (q) of sub-
regulation (1) of regulation 2 of the Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012, made under the Securities
and Exchange Board of India Act, 1992 (15 of 1992);
(ba) "permanent establishment" shall have the same meaning assigned to it in
clause (iiia) of section 92F;
(bb) "securities" shall have the same meaning as assigned to it in clause (h) of
section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and
shall also include such other securities or instruments as may be notified by
the Central Government in the Official Gazette in this behalf;
(bc) "securitisation trust" shall have the same meaning assigned to it in clause (d)
of the Explanation to section 115TCA;
38
[(c) "specified fund" means,—
(i) a fund established or incorporated in India in the form of a trust or a
company or a limited liability partnership or a body corporate,—
(I) which has been granted a certificate of registration as a Category III
Alternative Investment Fund and is regulated under the Securities
and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012, made under the Securities and Exchange Board
of India Act, 1992 (15 of 1992) or 39[regulated under the
International Financial Services Centres Authority (Fund
Management) Regulations, 2022, made under the] International
Financial Services Centres Authority Act, 2019 (50 of 2019);
(II) which is located in any International Financial Services Centre; and
(III) of which all the units other than unit held by a sponsor or manager
are held by 40[non-residents :
Provided that the condition specified in this item shall not apply
where any unit holder or holders, being non-resident during the
previous year when such unit or units were issued, becomes resident
under clause (1) or clause (1A) of section 6 in any previous year
subsequent to that year, if the aggregate value and number of the
units held by such resident unit holder or holders do not exceed five
per cent of the total units issued and fulfil such other conditions as
may be prescribed41; or]
(ii) investment division of an offshore banking unit, which has been—
(I) granted a certificate of registration as a Category-I foreign portfolio
investor under the Securities and Exchange Board of India (Foreign
Portfolio Investors) Regulations, 2019 made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) and which has
commenced its operations on or before the 31st day of March, 2024;
and
(II) fulfils such conditions including maintenance of sepa-rate accounts
for its investment division, as may be prescribed;]
(d) "sponsor" shall have the meaning assigned to it in clause (w) of sub-
regulation (1) of regulation 2 of the Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012, made under the Securities
and Exchange Board of India Act, 1992 (15 of 1992);
(e) "trust" means a trust established under the Indian Trusts Act, 1882 (2 of
1882) or under any other law for the time being in force;
(f) "unit" means beneficial interest of an investor in the fund and shall include
shares or partnership interests;
42
[(4E) any income accrued or arisen to, or received by a non-resident as a result of transfer
of non-deliverable forward contracts 43[or offshore derivative instruments or over-
the-counter derivatives,] entered into with an offshore banking unit of an
International Financial Services Centre as referred to in sub-section (1A) of section
80LA, which fulfils such conditions as may be prescribed44;
Following clause (4E) shall be substituted for the existing clause (4E) of section
10 by the Finance Act, 2023, w.e.f. 1-4-2024 :
(4E) any income accrued or arisen to, or received by a non-resident as a result of
—
(i) transfer of non-deliverable forward contracts or offshore derivative
instruments or over-the-counter derivatives; or
(ii) distribution of income on offshore derivative instruments,
entered into with an offshore banking unit of an International Financial
Services Centre referred to in sub-section (1A) of section 80LA, which fulfils
such conditions as may be prescribed;
(4F) any income of a non-resident by way of royalty or interest , on account of lease of
an aircraft 45[or a ship] in a previous year, paid by a unit of an International
Financial Services Centre as referred to in sub-section (1A) of section 80LA, if the
unit has commenced its operations on or before the 31st day of March, 2024.
46
[Explanation.—For the purposes of this clause,—
(i) "aircraft" means an aircraft or a helicopter, or an engine of an aircraft or a
helicopter, or any part thereof;
(ii) "ship" means a ship or an ocean vessel, engine of a ship or ocean vessel, or
any part thereof;]]
47
[(4G) any income received by a non-resident from portfolio of securities or financial
products or funds, managed or administered by any portfolio manager on behalf of
such non-resident, in an account maintained with an Offshore Banking Unit in any
International Financial Services Centre, as referred to in sub-section (1A)
of section 80LA, to the extent such income accrues or arises outside India and is not
deemed to accrue or arise in India.
Explanation.—For the purposes of this clause, "portfolio manager" shall have the
same meaning as assigned to it in clause (z) of sub-regulation (1) of regulation 2 of
the International Financial Services Centres Authority (Capital Market
Intermediaries) Regulations, 2021, made under the International Financial Services
Centres Authority Act, 2019 (50 of 2019);]
Following clauses (4G) and (4H) shall be substituted for the existing clause (4G)
of section 10 by the Finance Act, 2023, w.e.f. 1-4-2024 :
(4G) any income received by a non-resident from,—
(i) portfolio of securities or financial products or funds, managed or
administered by any portfolio manager on behalf of such non-resident; or
(ii) such activity carried out by such person, as may be notified by the Central
Government in the Official Gazette,
in an account maintained with an Offshore Banking Unit in any International
Financial Services Centre, as referred to in sub-section (1A) of section 80LA, to the
extent such income accrues or arises outside India and is not deemed to accrue or
arise in India.
Explanation.—For the purposes of this clause, "portfolio manager" shall have the
same meaning as assigned to it in clause (z) of sub-regulation (1) of regulation 2 of
the International Financial Services Centres Authority (Capital Market
Intermediaries) Regulations, 2021, made under the International Financial Services
Centres Authority Act, 2019 (50 of 2019);
(4H) any income of a non-resident or a Unit of an International Financial Services
Centre as referred to in sub-section (1A) of section 80LA, engaged primarily in the
business of leasing of an aircraft, by way of capital gains arising from the transfer
of equity shares of domestic company, being a Unit of an International Financial
Services Centre, as referred to in sub-section (1A) of section 80LA, engaged
primarily in the business of lease of an aircraft which has commenced operations
on or before the 31st day of March, 2026:
Provided that the provisions of this clause shall apply for capital gains arising
from the transfer of equity shares of such domestic company in a previous year
relevant to an assessment year falling within the—
(a) period of ten assessment years beginning with the assessment year relevant to
the previous year in which the domestic company has commenced operations;
or
(b) period of ten assessment years beginning with the assessment year
commencing on the 1st day of April, 2024, where the period referred to in
clause (a) ends before the 1st day of April, 2034.
Explanation.—For the purposes of this clause, "aircraft" means an aircraft or a
helicopter, or an engine of an aircraft or a helicopter, or any part thereof;
(5) in the case of an individual, the value of any travel concession or assistance received
by, or due to, him,—
(a) from his employer for himself and his family, in connection with his
proceeding on leave to any place in India ;
(b) from his employer or former employer for himself and his family, in
connection with his proceeding to any place in India after retirement from
service or after the termination of his service,
subject to such conditions as may be prescribed48 (including conditions as to number
of journeys and the amount which shall be exempt per head) having regard to the
travel concession or assistance granted to the employees of the Central
Government :
Provided that the amount exempt under this clause shall in no case exceed the
amount of expenses actually incurred for the purpose of such travel:
49
[Provided further that for the assessment year beginning on the 1st day of April,
2021, the value in lieu of any travel concession or assistance received by, or due to,
such individual shall also be exempt under this clause subject to the fulfilment of
such conditions (including the condition of incurring such amount of such
expenditure within such period), as may be prescribed.]
49a
[Explanation 1].—For the purposes of this clause, "family", in relation to an
individual, means—
(i) the spouse and children of the individual ; and
(ii) the parents, brothers and sisters of the individual or any of them, wholly or
mainly dependent on the individual.
49b
[Explanation 2.—For the removal of doubts, it is hereby clarified that where an
individual claims exemption and the exemption is allowed under the second proviso
in connection with the prescribed expenditure, no exemption shall be allowed under
this clause in respect of such prescribed expenditure to any other individual;]
(5A) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(5B) [Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]
(6) in the case of an individual who is not a citizen of India,—
(i) [***]
(ii) the remuneration received by him as an official, by whatever name called, of
an embassy, high commission, legation, commission, consulate or the trade
representation of a foreign State, or as a member of the staff of any of these
officials, for service in such capacity :
Provided that the remuneration received by him as a trade commissioner or
other official representative in India of the Government of a foreign State (not
holding office as such in an honorary capacity), or as a member of the staff of
any of those officials, shall be exempt only if the remuneration of the
corresponding officials or, as the case may be, members of the staff, if any, of
the Government resident for similar purposes in the country concerned enjoys
a similar exemption in that country :
Provided further that such members of the staff are subjects of the country
represented and are not engaged in any business or profession or employment
in India otherwise than as members of such staff ;
(iii) to (v) [Sub-clause (ii) substituted for sub-clauses (ii) to (v) by the Finance
Act, 1988, w.e.f. 1-4-1989;]
(vi) the remuneration received by him as an employee of a foreign enterprise for
services rendered by him during his stay in India, provided the following
conditions are fulfilled—
(a) the foreign enterprise is not engaged in any trade or business in India ;
(b) his stay in India does not exceed in the aggregate a period of ninety days
in such previous year ; and
(c) such remuneration is not liable to be deducted from the income of the
employer chargeable under this Act ;
(via) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(vii) [Omitted by the Finance Act, 1993, w.e.f. 1-4-1993;]
(viia) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(viii) any income chargeable under the head "Salaries" received by or due to any
such individual being a non-resident as remuneration for services rendered in
connection with his employment on a foreign ship where his total stay in India
does not exceed in the aggregate a period of ninety days in the previous year ;
(ix) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(x) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(xi) the remuneration received by him as an employee of the Government of a
foreign State during his stay in India in connection with his training in any
establishment or office of, or in any undertaking owned by,—
(i) the Government ; or
(ii) any company in which the entire paid-up share capital is held by the
Central Government, or any State Government or Governments, or partly
by the Central Government and partly by one or more State Governments
; or
(iii) any company which is a subsidiary of a company referred to in item (ii) ;
or
(iv) any corporation established by or under a Central, State or Provincial Act
; or
(v) any society registered under the Societies Registration Act, 1860 (21 of
1860), or under any other corresponding law for the time being in force
and wholly financed by the Central Government, or any State
Government or State Governments, or partly by the Central Government
and partly by one or more State Governments ;
(6A) where in the case of a foreign company deriving income by way of royalty or fees
for technical services received from Government or an Indian concern in pursuance
of an agreement made by the foreign company with Government or the Indian
concern after the 31st day of March, 1976 but before the 1st day of June, 2002 and,
—
(a) where the agreement relates to a matter included in the industrial policy, for
the time being in force, of the Government of India, such agreement is in
accordance with that policy ; and
(b) in any other case, the agreement is approved by the Central Government,
the tax on such income is payable, under the terms of the agreement, by
Government or the Indian concern to the Central Government, the tax so paid.
Explanation.—For the purposes of this clause and clause (6B),—
(a) "fees for technical services" shall have the same meaning as in Explanation
2 to clause (vii) of sub-section (1) of section 9 ;
(b) "foreign company" shall have the same meaning as in section 80B ;
(c) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of
sub-section (1) of section 9;
(6B) where in the case of a non-resident (not being a company) or of a foreign company
deriving income (not being salary, royalty or fees for technical services) from
Government or an Indian concern in pursuance of an agreement entered into before
the 1st day of June, 2002 by the Central Government with the Government of a
foreign State or an international organisation, the tax on such income is payable by
Government or the Indian concern to the Central Government under the terms of
that agreement or any other related agreement approved before that date by the
Central Government, the tax so paid;
(6BB) where in the case of the Government of a foreign State or a foreign enterprise
deriving income from an Indian company engaged in the business of operation of
aircraft, as a consideration of acquiring an aircraft or an aircraft engine (other than
payment for providing spares, facilities or services in connection with the operation
of leased aircraft) on lease under an agreement entered into after the 31st day of
March, 1997 but before the 1st day of April, 1999, or entered into after the 31st day
of March, 2007 and approved by the Central Government in this behalf and the tax
on such income is payable by such Indian company under the terms of that
agreement to the Central Government, the tax so paid.
Explanation.—For the purposes of this clause, the expression "foreign enterprise"
means a person who is a non-resident;
(6C) any income arising to such foreign company, as the Central Government may, by
notification in the Official Gazette, specify in this behalf, by way of royalty or fees
for technical services received in pursuance of an agreement entered into with that
Government for providing services in or outside India in projects connected with
security of India ;
(6D) any income arising to a non-resident, not being a company, or a foreign company,
by way of royalty from, or fees for technical services rendered in or outside India to,
the National Technical Research Organisation;
(7) any allowances or perquisites paid or allowed as such outside India by the
Government to a citizen of India for rendering service outside India ;
(8) in the case of an individual who is assigned to duties in India in connection with any
co-operative technical assistance programmes and projects in accordance with an
agreement entered into by the Central Government and the Government of a foreign
State (the terms whereof provide for the exemption given by this clause)—
(a) the remuneration received by him directly or indirectly from the Government
of that foreign State for such duties, and
(b) any other income of such individual which accrues or arises outside India,
and is not deemed to accrue or arise in India, in respect of which such
individual is required to pay any income or social security tax to the
Government of that foreign State :
50
[Provided that nothing contained in this clause shall apply to such remuneration
and income of the previous year relevant to the assessment year beginning on or
after the 1st day of April, 2023;]
(8A) in the case of a consultant—
(a) any remuneration or fee received by him or it, directly or indirectly, out of
the funds made available to an international organisation [hereafter referred to
in this clause and clause (8B) as the agency] under a technical assistance grant
agreement between the agency and the Government of a foreign State ; and
(b) any other income which accrues or arises to him or it outside India, and is not
deemed to accrue or arise in India, in respect of which such consultant is
required to pay any income or social security tax to the Government of the
country of his or its origin:
50
[Provided that nothing contained in this clause shall apply to such remuneration,
fee and income of the previous year relevant to the assessment year beginning on or
after the 1st day of April, 2023.]
Explanation.—In this clause, "consultant" means—
(i) any individual, who is either not a citizen of India or, being a citizen of India,
is not ordinarily resident in India ; or
(ii) any other person, being a non-resident,
engaged by the agency for rendering technical services in India in connection with
any technical assistance programme or project, provided the following conditions
are fulfilled, namely :—
(1) the technical assistance is in accordance with an agreement entered into by
the Central Government and the agency ; and
(2) the agreement relating to the engagement of the consultant is approved by the
prescribed authority51-52 for the purposes of this clause ;
(8B) in the case of an individual who is assigned to duties in India in connection with
any technical assistance programme and project in accordance with an agreement
entered into by the Central Government and the agency—
(a) the remuneration received by him, directly or indirectly, for such duties from
any consultant referred to in clause (8A) ; and
(b) any other income of such individual which accrues or arises outside India,
and is not deemed to accrue or arise in India, in respect of which such
individual is required to pay any income or social security tax to the country
of his origin, provided the following conditions are fulfilled, namely :—
(i) the individual is an employee of the consultant referred to in clause (8A)
and is either not a citizen of India or, being a citizen of India, is not
ordinarily resident in India ; and
(ii) the contract of service of such individual is approved by the prescribed
authority51-52 before the commencement of his service :
53
[Provided that nothing contained in this clause shall apply to such remuneration
and income of the previous year relevant to the assessment year beginning on or
after the 1st day of April, 2023;]
(9) the income of any member of the family of any such individual as is referred to in
clause (8) or clause (8A) or, as the case may be, clause (8B) accompanying him to
India, which accrues or arises outside India, and is not deemed to accrue or arise in
India, in respect of which such member is required to pay any income or social
security tax to the Government of that foreign State or, as the case may be, country
of origin of such member:
53
[Provided that nothing contained in this clause shall apply to such income of the
previous year relevant to the assessment year beginning on or after the 1st day of
April, 2023;]
(10) (i) any death-cum-retirement gratuity received under the revised Pension Rules of
the Central Government or, as the case may be, the Central Civil Services (Pension)
Rules, 1972, or under any similar scheme applicable to the members of the civil
services of the Union or holders of posts connected with defence or of civil posts
under the Union (such members or holders being persons not governed by the said
Rules) or to the members of the all-India services or to the members of the civil
services of a State or holders of civil posts under a State or to the employees of a
local authority or any payment of retiring gratuity received under the Pension Code
or Regulations applicable to the members of the defence services ;
(ii) any gratuity received under the Payment of Gratuity Act, 1972 (39 of 1972), to
the extent it does not exceed an amount calculated in accordance with the provisions
of sub-sections (2) and (3) of section 4 of that Act ;
(iii) any other gratuity received by an employee on his retirement or on his
becoming incapacitated prior to such retirement or on termination of his
employment, or any gratuity received by his widow, children or dependants on his
death, to the extent it does not, in either case, exceed one-half month's salary for
each year of completed service, calculated on the basis of the average salary for the
ten months immediately preceding the month in which any such event occurs,
subject to such limit as the Central Government may, by notification in the Official
Gazette, specify in this behalf having regard to the limit applicable in this behalf to
the employees of that Government :
Provided that where any gratuities referred to in this clause are received by an
employee from more than one employer in the same previous year, the aggregate
amount exempt from income-tax under this clause shall not exceed the limit so
specified :
Provided further that where any such gratuity or gratuities was or were received in
any one or more earlier previous years also and the whole or any part of the amount
of such gratuity or gratuities was not included in the total income of the assessee of
such previous year or years, the amount exempt from income-tax under this clause
shall not exceed the limit so specified as reduced by the amount or, as the case may
be, the aggregate amount not included in the total income of any such previous year
or years.
Explanation.—In this clause, and in clause (10AA), "salary" shall have the meaning
assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule ;
(10A) (i) any payment in commutation of pension received under the Civil Pensions
(Commutation) Rules of the Central Government or under any similar scheme
applicable to the members of the civil services of the Union or holders of posts
connected with defence or of civil posts under the Union (such members or holders
being persons not governed by the said Rules) or to the members of the all-India
services or to the members of the defence services or to the members of the civil
services of a State or holders of civil posts under a State or to the employees of a
local authority or a corporation established by a Central, State or Provincial Act ;
(ii) any payment in commutation of pension received under any scheme of any other
employer, to the extent it does not exceed—
(a) in a case where the employee receives any gratuity, the commuted value of
one-third of the pension which he is normally entitled to receive, and
(b) in any other case, the commuted value of one-half of such pension,
such commuted value being determined having regard to the age of the recipient,
the state of his health, the rate of interest and officially recognised tables of
mortality ;
(iii) any payment in commutation of pension received from a fund under clause
(23AAB) ;
(10AA) (i) any payment received by an employee of the Central Government or a State
Government as the cash equivalent of the leave salary in respect of the period of
earned leave at his credit at the time of his retirement whether on superannuation or
otherwise ;
(ii) any payment of the nature referred to in sub-clause (i) received by an employee,
other than an employee of the Central Government or a State Government, in
respect of so much of the period of earned leave at his credit at the time of his
retirement whether on superannuation or otherwise as does not exceed ten months,
calculated on the basis of the average salary drawn by the employee during the
period of ten months immediately preceding his retirement whether on
superannuation or otherwise, subject to such limit as the Central Government may,
by notification in the Official Gazette, specify in this behalf having regard to the
limit applicable in this behalf to the employees of that Government :
Provided that where any such payments are received by an employee from more
than one employer in the same previous year, the aggregate amount exempt from
income-tax under this sub-clause shall not exceed the limit so specified :
Provided further that where any such payment or payments was or were received
in any one or more earlier previous years also and the whole or any part of the
amount of such payment or payments was or were not included in the total income
of the assessee of such previous year or years, the amount exempt from income-tax
under this sub-clause shall not exceed the limit so specified, as reduced by the
amount or, as the case may be, the aggregate amount not included in the total
income of any such previous year or years.
Explanation.—For the purposes of sub-clause (ii),—
the entitlement to earned leave of an employee shall not exceed thirty days for every
year of actual service rendered by him as an employee of the employer from whose
service he has retired ;
(10B) any compensation received by a workman under the Industrial Disputes Act, 1947
(14 of 1947), or under any other Act or Rules, orders or notifications issued
thereunder or under any standing orders or under any award, contract of service or
otherwise, at the time of his retrenchment :
Provided that the amount exempt under this clause shall not exceed—
(i) an amount calculated in accordance with the provisions of clause (b) of
section 25F of the Industrial Disputes Act, 1947 (14 of 1947) ; or
(ii) such amount, not being less than fifty thousand rupees, as the Central
Government may, by notification in the Official Gazette, specify in this
behalf,
whichever is less :
Provided further that the preceding proviso shall not apply in respect of any
compensation received by a workman in accordance with any scheme which the
Central Government may, having regard to the need for extending special protection
to the workmen in the undertaking to which such scheme applies and other relevant
circumstances, approve in this behalf.
Explanation.—For the purposes of this clause—
(a) compensation received by a workman at the time of the closing down of the
undertaking in which he is employed shall be deemed to be compensation
received at the time of his retrenchment ;
(b) compensation received by a workman, at the time of the transfer (whether by
agreement or by operation of law) of the ownership or management of the
undertaking in which he is employed from the employer in relation to that
undertaking to a new employer, shall be deemed to be compensation received
at the time of his retrenchment if—
(i) the service of the workman has been interrupted by such transfer ; or
(ii) the terms and conditions of service applicable to the workman after such
transfer are in any way less favourable to the workman than those
applicable to him immediately before the transfer ; or
(iii) the new employer is, under the terms of such transfer or otherwise,
legally not liable to pay to the workman, in the event of his retrenchment,
compensation on the basis that his service has been continuous and has
not been interrupted by the transfer ;
(c) the expressions "employer" and "workman" shall have the same meanings as
in the Industrial Disputes Act, 1947 (14 of 1947);
(10BB) any payments made under the Bhopal Gas Leak Disaster (Processing of Claims)
Act, 1985 (21 of 1985), and any scheme framed thereunder except payment made to
any assessee in connection with the Bhopal Gas Leak Disaster to the extent such
assessee has been allowed a deduction under this Act on account of any loss or
damage caused to him by such disaster ;
(10BC) any amount received or receivable from the Central Government or a State
Government or a local authority by an individual or his legal heir by way of
compensation on account of any disaster, except the amount received or receivable
to the extent such individual or his legal heir has been allowed a deduction under
this Act on account of any loss or damage caused by such disaster.
Explanation.—For the purposes of this clause, the expression "disaster" shall have
the meaning assigned to it under clause (d) of section 2 of the Disaster Management
Act, 2005 (53 of 2005);
(10C) any amount received or receivable by an employee of—
(i) a public sector company ; or
(ii) any other company ; or
(iii) an authority established under a Central, State or Provincial Act ; or
(iv) a local authority ; or
(v) a co-operative society ; or
(vi) a University established or incorporated by or under a Central, State or
Provincial Act and an institution declared to be a University under section 3
of the University Grants Commission Act, 1956 (3 of 1956) ; or
(vii) an Indian Institute of Technology within the meaning of clause (g) of section
3 of the Institutes of Technology Act, 1961 (59 of 1961) ; or
(viia) any State Government; or
(viib) the Central Government; or
(viic) an institution, having importance throughout India or in any State or States, as
the Central Government may, by notification in the Official Gazette, specify
in this behalf; or
(viii) such institute of management as the Central Government may, by notification
in the Official Gazette, specify in this behalf,
on his voluntary retirement or termination of his service, in accordance with any
scheme or schemes of voluntary retirement or in the case of a public sector
company referred to in sub-clause (i), a scheme of voluntary separation, to the
extent such amount does not exceed five lakh rupees :
Provided that the schemes of the said companies or authorities or societies or
Universities or the Institutes referred to in sub-clauses (vii) and (viii), as the case
may be, governing the payment of such amount are framed in accordance with such
guidelines (including inter alia criteria of economic viability) as may be
prescribed54 :
Provided further that where exemption has been allowed to an employee under
this clause for any assessment year, no exemption thereunder shall be allowed to
him in relation to any other assessment year :
Provided also that where any relief has been allowed to an assessee under section
89 for any assessment year in respect of any amount received or receivable on his
voluntary retirement or termination of service or voluntary separation, no exemption
under this clause shall be allowed to him in relation to such, or any other,
assessment year;
(10CC) in the case of an employee, being an individual deriving income in the nature of a
perquisite, not provided for by way of monetary payment, within the meaning of
clause (2) of section 17, the tax on such income actually paid by his employer, at
the option of the employer, on behalf of such employee, notwithstanding anything
contained in section 200 of the Companies Act, 1956 (1 of 1956);
(10D) any sum received under a life insurance policy, including the sum allocated by way
of bonus on such policy, other than—
(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of
section 80DDA; or
(b) any sum received under a Keyman insurance policy; or
(c) any sum received under an insurance policy issued on or after the 1st day of
April, 2003 but on or before the 31st day of March, 2012 in respect of which
the premium payable for any of the years during the term of the policy
exceeds twenty per cent of the actual capital sum assured ; or
(d) any sum received under an insurance policy issued on or after the 1st day of
April, 2012 in respect of which the premium payable for any of the years
during the term of the policy exceeds ten per cent of the actual capital sum
assured:
Provided that the provisions of sub-clauses (c) and (d) shall not apply to any sum
received on the death of a person:
Provided further that for the purpose of calculating the actual capital sum assured
under sub-clause (c), effect shall be given to the Explanation to sub-section (3)
of section 80C 55[***] :
Provided also that where the policy, issued on or after the 1st day of April, 2013, is
for insurance on life of any person, who is—
(i) a person with disability or a person with severe disability as referred to
in section 80U; or
(ii) suffering from disease or ailment as specified in the rules made under section
80DDB,
the provisions of this sub-clause shall have effect as if for the words "ten per cent",
the words "fifteen per cent" had been substituted:
56
[Provided also that nothing contained in this clause shall apply with respect to
any unit linked insurance policy, issued on or after the 1st day of February, 2021, if
the amount of premium payable for any of the previous year during the term of such
policy exceeds two lakh and fifty thousand rupees:
Provided also that if the premium is payable, by a person, for more than one unit
linked insurance policies, issued on or after the 1st day of February, 2021, the
provisions of this clause shall apply only with respect to those unit linked insurance
policies, where the aggregate amount of premium does not exceed the amount
referred to in fourth proviso in any of the previous year during the term of any of
those policies:
Provided also that the provisions of the fourth and fifth provisos shall not apply to
any sum received on the death of a person:
Following provisos shall be substituted for the existing sixth proviso to clause
(10D) of section 10 by the Finance Act, 2023, w.e.f. 1-4-2024:
Provided also that nothing contained in this clause shall apply with respect to any
life insurance policy, other than a unit linked insurance policy, issued on or after
the 1st day of April, 2023, if the amount of premium payable for any of the previous
years during the term of such policy exceeds five lakh rupees:
Provided also that if the premium is payable by a person for more than one life
insurance policy, other than unit linked insurance policy, issued on or after the 1st
day of April, 2023, the provisions of this clause shall apply only with respect to
those life insurance policies, other than unit linked insurance policies, where the
aggregate amount of premium does not exceed the amount referred to in the sixth
proviso in any of the previous years during the term of any of those policies:
Provided also that the provisions of the fourth, fifth, sixth and seventh provisos
shall not apply to any sum received on the death of a person:
Provided also that if any difficulty arises in giving effect to the provisions of this
clause, the Board may, with the previous approval of the Central Government, issue
guidelines for the purpose of removing the difficulty and every guideline issued by
the Board under this proviso shall be laid before each House of Parliament, and
shall be binding on the income-tax authorities and the assessee.]
Explanation 1.—For the purposes of this clause, "Keyman insurance policy" means
a life insurance policy taken by a person on the life of another person who is or was
the employee of the first-mentioned person or is or was connected in any manner
whatsoever with the business of the first-mentioned person and includes such policy
which has been assigned to a person, at any time during the term of the policy, with
or without any consideration.
Explanation 2.—For the purposes of sub-clause (d), the expression "actual capital
sum assured" shall have the meaning assigned to it in the Explanation to sub-section
(3A) of section 80C.
57
[Explanation 3.— For the purposes of this clause, "unit linked insurance policy"
means a life insurance policy which has components of both investment and
insurance and is linked to a unit as defined in clause (ee) of regulation 3 of the
Insurance Regulatory and Development Authority of India (Unit Linked Insurance
Products) Regulations, 2019 issued by the Insurance Regulatory and Development
Authority under the Insurance Act, 1938 (4 of 1938) and the Insurance Regulatory
and Development Authority Act, 1999 (41 of 1999);]
(11) any payment from a provident fund to which the Provident Funds Act, 1925 (19 of
1925), applies or from any other provident fund set up by the Central Government
and notified by it in this behalf in the Official Gazette:
58
[Provided that the provisions of this clause shall not apply to the income by way
of interest accrued during the previous year in the account of a person to the extent
it relates to the amount or the aggregate of amounts of contribution made by that
person exceeding two lakh and fifty thousand rupees in any previous year in that
fund, on or after the 1st day of April, 2021 and computed in such manner as may be
prescribed59 :
Provided further that if the contribution by such person is in a fund in which there
is no contribution by the employer of such person, the provisions of the first proviso
shall have the effect as if for the words "two lakh and fifty thousand rupees", the
words "five lakh rupees" had been substituted;]
(11A) any payment from an account, opened in accordance with the Sukanya Samriddhi
Account Rules, 201459a made under the Government Savings Bank Act, 1873 (5 of
1873);
(12) the accumulated balance due and becoming payable to an employee participating in
a recognised provident fund, to the extent provided in rule 8 of Part A of the Fourth
Schedule :
59b
Provided that the provisions of this clause shall not apply to the income by way
of interest accrued during the previous year in the account of a person to the extent
it relates to the amount or the aggregate of amounts of contribution made by that
person exceeding two lakh and fifty thousand rupees in any previous year in that
fund, on or after the 1st day of April, 2021 and computed in such manner as may be
prescribed59c:
Provided further that if the contribution by such person is in a fund in which there
is no contribution by the employer of such person, the provisions of the first proviso
shall have the effect as if for the words "two lakh and fifty thousand rupees", the
words "five lakh rupees" had been substituted;]
(12A) any payment from the National Pension System Trust to an assessee on closure of
his account or on his opting out of the pension scheme referred to in section
80CCD, to the extent it does not exceed sixty per cent of the total amount payable to
him at the time of such closure or his opting out of the scheme;
(12B) any payment from the National Pension System Trust to an employee under the
pension scheme referred to in section 80CCD, on partial withdrawal made out of his
account in accordance with the terms and conditions, specified under the Pension
Fund Regulatory and Development Authority Act, 2013 (23 of 2013) and the
regulations made thereunder, to the extent it does not exceed twenty-five per cent of
the amount of contributions made by him;
60
[(12C) any payment from the Agniveer Corpus Fund to a person enrolled under
the Agnipath Scheme, or to his nominee.
Explanation.—For the purposes of this clause "Agniveer Corpus Fund" and
"Agnipath Scheme" shall have the meanings respectively assigned to them
in section 80CCH;]
(13) any payment from an approved superannuation fund made—
(i) on the death of a beneficiary; or
(ii) to an employee in lieu of or in commutation of an annuity on his retirement at
or after a specified age or on his becoming incapa-citated prior to such
retirement; or
(iii) by way of refund of contributions on the death of a beneficiary ; or
(iv) by way of refund of contributions to an employee on his leaving the service in
connection with which the fund is established otherwise than by retirement at
or after a specified age or on his becoming incapacitated prior to such
retirement, to the extent to which such payment does not exceed the
contributions made prior to the commencement of this Act and any interest
thereon; or
(v) by way of transfer to the account of the employee under a pension scheme
referred to in section 80CCD and notified by the Central Government;
(13A) any special allowance specifically granted to an assessee by his employer to meet
expenditure actually incurred on payment of rent (by whatever name called) in
respect of residential accommodation occupied by the assessee, to such extent as
may be prescribed61 having regard to the area or place in which such
accommodation is situate and other relevant considerations.
Explanation.—For the removal of doubts, it is hereby declared that nothing
contained in this clause shall apply in a case where—
(a) the residential accommodation occupied by the assessee is owned by him ; or
(b) the assessee has not actually incurred expenditure on payment of rent (by
whatever name called) in respect of the residential accommodation occupied
by him ;
(14) (i) any such special allowance or benefit, not being in the nature of a perquisite
within the meaning of clause (2) of section 17, specifically granted to meet
expenses wholly, necessarily and exclusively incurred in the performance of the
duties of an office or employment of profit, as may be prescribed62, to the extent to
which such expenses are actually incurred for that purpose ;
(ii) any such allowance granted to the assessee either to meet his personal expenses
at the place where the duties of his office or employment of profit are ordinarily
performed by him or at the place where he ordinarily resides, or to compensate him
for the increased cost of living, as may be prescribed 62a and to the extent as may be
prescribed :
Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature
of personal allowance granted to the assessee to remunerate or compensate him for
performing duties of a special nature relating to his office or employment unless
such allowance is related to the place of his posting or residence ;
(14A) [***]
(15) (i) income by way of interest, premium on redemption or other payment on such
securities, bonds, annuity certificates, savings certificates, other certificates issued
by the Central Government and deposits as the Central Government may, by
notification in the Official Gazette, specify in this behalf, subject to such conditions
and limits as may be specified in the said notification ;
(iib) in the case of an individual or a Hindu undivided family, interest on such
Capital Investment Bonds as the Central Government may, by notification in the
Official Gazette, specify in this behalf :
Provided that the Central Government shall not specify, for the purposes of this
sub-clause, such Capital Investment Bonds on or after the 1st day of June, 2002;
(iic) in the case of an individual or a Hindu undivided family, interest on such
Relief Bonds as the Central Government may, by notification in the Official
Gazette, specify in this behalf ;
(iid) interest on such bonds, as the Central Government may, by notification in the
Official Gazette, specify, arising to—
(a) a non-resident Indian, being an individual owning the bonds ; or
(b) any individual owning the bonds by virtue of being a nominee or survivor of
the non-resident Indian ; or
(c) any individual to whom the bonds have been gifted by the non-resident
Indian :
Provided that the aforesaid bonds are purchased by a non-resident Indian in foreign
exchange and the interest and principal received in respect of such bonds, whether
on their maturity or otherwise, is not allowable to be taken out of India :
Provided further that where an individual, who is a non-resident Indian in any
previous year in which the bonds are acquired, becomes a resident in India in any
subsequent year, the provisions of this sub-clause shall continue to apply in relation
to such individual :
Provided also that in a case where the bonds are encashed in a previous year prior
to their maturity by an individual who is so entitled, the provisions of this sub-
clause shall not apply to such individual in relation to the assessment year relevant
to such previous year :
Provided also that the Central Government shall not specify, for the purposes of
this sub-clause, such bonds on or after the 1st day of June, 2002.
Explanation.—For the purposes of this sub-clause, the expression "non-resident
Indian" shall have the meaning assigned to it in clause (e) of section 115C;
(iii) interest on securities held by the Issue Department of the Central Bank of
Ceylon constituted under the Ceylon Monetary Law Act, 1949;
(iiia) interest payable to any bank incorporated in a country outside India and
authorised to perform central banking functions in that country on any deposits
made by it, with the approval of the Reserve Bank of India, with any scheduled
bank.
Explanation.—For the purposes of this sub-clause, "scheduled bank" shall have the
meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-
section (1) of section 36;
(iiib) interest payable to the Nordic Investment Bank, being a multilateral financial
institution constituted by the Governments of Denmark, Finland, Iceland, Norway
and Sweden, on a loan advanced by it to a project approved by the Central
Government in terms of the Memorandum of Understanding entered into by the
Central Government with that Bank on the 25th day of November, 1986;
(iiic) interest payable to the European Investment Bank, on a loan granted by it in
pursuance of the framework-agreement for financial co-operation entered into on
the 25th day of November, 1993 by the Central Government with that Bank;
(iv) interest payable—
(a) by Government or a local authority on moneys borrowed by it before the 1st
day of June, 2001 from, or debts owed by it before the 1st day of June, 2001
to, sources outside India;
(b) by an industrial undertaking in India on moneys borrowed by it under a loan
agreement entered into before the 1st day of June, 2001 with any such
financial institution in a foreign country as may be approved in this behalf by
the Central Government by general or special order ;
(c) by an industrial undertaking in India on any moneys borrowed or debt
incurred by it before the 1st day of June, 2001 in a foreign country in respect
of the purchase outside India of raw materials or components or capital plant
and machinery, to the extent to which such interest does not exceed the
amount of interest calculated at the rate approved by the Central Government
in this behalf, having regard to the terms of the loan or debt and its repayment.
Explanation 1.—For the purposes of this item, "purchase of capital plant and
machinery" includes the purchase of such capital plant and machinery under a
hire-purchase agreement or a lease agreement with an option to purchase such
plant and machinery.
Explanation 2.—For the removal of doubts, it is hereby declared that the
usance interest payable outside India by an undertaking engaged in the
business of ship-breaking in respect of purchase of a ship from outside India
shall be deemed to be the interest payable on a debt incurred in a foreign
country in respect of the purchase outside India;
(d) by the Industrial Finance Corporation of India established by the Industrial
Finance Corporation Act, 1948 (15 of 1948), or the Industrial Development
Bank of India established under the Industrial Development Bank of India
Act, 1964 (18 of 1964), or the Export-Import Bank of India established under
the Export-Import Bank of India Act, 1981 (28 of 1981), or the National
Housing Bank established under section 3 of the National Housing Bank Act,
1987 (53 of 1987), or the Small Industries Development Bank of India
established under section 3 of the Small Industries Development Bank of
India Act, 1989 (39 of 1989), or the Industrial Credit and Investment
Corporation of India [a company formed and registered under the Indian
Companies Act, 1913 (7 of 1913)], on any moneys borrowed by it from
sources outside India before the 1st day of June, 2001, to the extent to which
such interest does not exceed the amount of interest calculated at the rate
approved by the Central Government in this behalf, having regard to the terms
of the loan and its repayment;
(e) by any other financial institution established in India or a banking company to
which the Banking Regulation Act, 1949 (10 of 1949), applies (including any
bank or banking institution referred to in section 51 of that Act), on any
moneys borrowed by it from sources outside India before the 1st day of June,
2001 under a loan agreement approved by the Central Government where the
moneys are borrowed either for the purpose of advancing loans to industrial
undertakings in India for purchase outside India of raw materials or capital
plant and machinery or for the purpose of importing any goods which the
Central Government may consider necessary to import in the public interest,
to the extent to which such interest does not exceed the amount of interest
calculated at the rate approved by the Central Government in this behalf,
having regard to the terms of the loan and its repayment;
(f) by an industrial undertaking in India on any moneys borrowed by it in foreign
currency from sources outside India under a loan agreement approved by the
Central Government before the 1st day of June, 2001 having regard to the
need for industrial development in India, to the extent to which such interest
does not exceed the amount of interest calculated at the rate approved by the
Central Government in this behalf, having regard to the terms of the loan and
its repayment;
(fa) by a scheduled bank to a non-resident or to a person who is not ordinarily
resident within the meaning of sub-section (6) of section 6 on deposits in
foreign currency where the acceptance of such deposits by the bank is
approved by the Reserve Bank of India.
Explanation.—For the purposes of this item, the expression "scheduled bank"
means the State Bank of India constituted under the State Bank of India Act,
1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India
(Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank
constituted under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
(40 of 1980), or any other bank being a bank included in the Second Schedule
to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-
operative bank;
(g) by a public company formed and registered in India with the main object of
carrying on the business of providing long-term finance for construction or
purchase of houses in India for residential purposes, being a company eligible
for deduction under clause (viii) of sub-section (1) of section 36 on any
moneys borrowed by it in foreign currency from sources outside India under a
loan agreement approved by the Central Government before the 1st day of
June, 2003, to the extent to which such interest does not exceed the amount of
interest calculated at the rate approved by the Central Government in this
behalf, having regard to the terms of the loan and its repayment.
Explanation.—For the purposes of items (f), (fa) and (g), the expression
"foreign currency" shall have the meaning assigned to it in the Foreign
Exchange Management Act, 1999 (42 of 1999);
(h) by any public sector company in respect of such bonds or debentures and
subject to such conditions, including the condition that the holder of such
bonds or debentures registers his name and the holding with that company, as
the Central Government may, by notification in the Official Gazette, specify
in this behalf;
(i) by Government on deposits made by an employee of the Central Government
or a State Government or a public sector company, in accordance with such
scheme as the Central Government may, by notification in the Official
Gazette, frame in this behalf, out of the moneys due to him on account of his
retirement, whether on superannuation or otherwise.
Explanation 1.—For the purposes of this sub-clause, the expression "industrial
undertaking" means any undertaking which is engaged in—
(a) the manufacture or processing of goods; or
(aa) the manufacture of computer software or recording of programme on any
disc, tape, perforated media or other information device; or
(b) the business of generation or distribution of electricity or any other form of
power; or
(ba) the business of providing telecommunication services; or
(c) mining; or
(d) the construction of ships; or
(da) the business of ship-breaking; or
(e) the operation of ships or aircrafts or construction or operation of rail systems.
Explanation 1A.—For the purposes of this sub-clause, the expression "interest" shall
not include interest paid on delayed payment of loan or on default if it is in excess
of two per cent per annum over the rate of interest payable in terms of such loan.
Explanation 2.—For the purposes of this clause, the expression "interest" includes
hedging transaction charges on account of currency fluctuation;
(v) interest on—
(a) securities held by the Welfare Commissioner, Bhopal Gas Victims, Bhopal,
in the Reserve Bank's SGL Account No. SL/DH 048;
(b) deposits for the benefit of the victims of the Bhopal gas leak disaster held in
such account, with the Reserve Bank of India or with a public sector bank, as
the Central Government may, by notification in the Official Gazette, specify,
whether prospectively or retrospectively but in no case earlier than the 1st day
of April, 1994 in this behalf.
Explanation.—For the purposes of this sub-clause, the expression "public sector
bank" shall have the meaning assigned to it in the Explanation to clause (23D);
(vi) interest on Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or
deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by
the Central Government;
(vii) interest on bonds—
(a) issued by a local authority or by a State Pooled Finance Entity; and
(b) specified by the Central Government by notification in the Official Gazette.
Explanation.—For the purposes of this sub-clause, the expression "State Pooled
Finance Entity" shall mean such entity which is set up in accordance with the
guidelines for the Pooled Finance Development Scheme notified by the Central
Government in the Ministry of Urban Development;
(viii) any income by way of interest received by a non-resident or a person who is
not ordinarily resident, in India on a deposit made on or after the 1st day of April,
2005, in an Offshore Banking Unit referred to in clause (u) of section 2 of the
Special Economic Zones Act, 2005;
(ix) any income by way of interest payable to a non-resident by a unit located in an
International Financial Services Centre in respect of monies borrowed by it on or
after the 1st day of September, 2019.
Explanation.—For the purposes of this sub-clause,—
(a) "International Financial Services Centre" shall have the meaning assigned to
it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of
2005);
(b) "unit" shall have the meaning assigned to it in clause (zc) of section 2 of the
Special Economic Zones Act, 2005 (28 of 2005);
(15A) any payment made, by an Indian company engaged in the business of operation of
aircraft, to acquire an aircraft or an aircraft engine (other than a payment for
providing spares, facilities or services in connection with the operation of leased
aircraft) on lease from the Government of a foreign State or a foreign enterprise
under an agreement, not being an agreement entered into between the 1st day of
April, 1997 and the 31st day of March, 1999, and approved by the Central
Government in this behalf :
Provided that nothing contained in this clause shall apply to any such agreement
entered into on or after the 1st day of April, 2007.
Explanation.—For the purposes of this clause, the expression "foreign enterprise"
means a person who is a non-resident;
(16) scholarships granted to meet the cost of education;
(17) any income by way of—
(i) daily allowance received by any person by reason of his membership of
Parliament or of any State Legislature or of any Committee thereof;
(ii) any allowance received by any person by reason of his membership of
Parliament under the Members of Parliament (Constituency Allowance)
Rules, 1986;
(iii) any constituency allowance received by any person by reason of his
membership of any State Legislature under any Act or rules made by that
State Legislature;
(17A) any payment made, whether in cash or in kind,—
(i) in pursuance of any award instituted in the public interest by the Central
Government or any State Government or instituted by any other body and
approved by the Central Government in this behalf; or
(ii) as a reward by the Central Government or any State Government for such
purposes as may be approved by the Central Government in this behalf in the
public interest;
(18) any income by way of—
(i) pension received by an individual who has been in the service of the Central
Government or State Government and has been awarded "Param Vir Chakra"
or "Maha Vir Chakra" or "Vir Chakra" or such other gallantry award as the
Central Government may, by notification in the Official Gazette, specify in
this behalf;
(ii) family pension received by any member of the family of an individual
referred to in sub-clause (i).
Explanation.—For the purposes of this clause, the expression "family" shall have
the meaning assigned to it in the Explanation to clause (5);
(19) family pension received by the widow or children or nominated heirs, as the case
may be, of a member of the armed forces (including para-military forces) of the
Union, where the death of such member has occurred in the course of operational
duties, in such circumstances and subject to such conditions, as may be prescribed63;
(19A) the annual value of any one palace in the occupation of a Ruler, being a palace, the
annual value whereof was exempt from income-tax before the commencement of
the Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of the provisions
of the Merged States (Taxation Concessions) Order, 1949, or the Part B States
(Taxation Concessions) Order, 1950, or, as the case may be, the Jammu and
Kashmir (Taxation Concessions) Order, 1958:
Provided that for the assessment year commencing on the 1st day of April, 1972,
the annual value of every such palace in the occupation of such Ruler during the
relevant previous year shall be exempt from income-tax;
(20) the income of a local authority which is chargeable under the head "Income from
house property", "Capital gains" or "Income from other sources" or from a trade or
business carried on by it which accrues or arises from the supply of a commodity or
service (not being water or electricity) within its own jurisdictional area or from the
supply of water or electricity within or outside its own jurisdictional area.
Explanation.—For the purposes of this clause, the expression "local authority"
means—
(i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or
(ii) Municipality as referred to in clause (e) of article 243P of the Constitution; or
(iii) Municipal Committee and District Board,
legally entitled to, or entrusted by the Government with, the control or
management of a Municipal or local fund; or
(iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2
of 1924);
(20A) [***]
64
(21) any income of a research association for the time being approved for the purpose of
clause (ii) or clause (iii) of sub-section (1) of section 35:
Provided that the research association—
(a) applies its income, or accumulates it for application, wholly and exclusively
to the objects for which it is established, and the provisions of sub-section (2)
and sub-section (3) of section 11 shall apply in relation to such accumulation
subject to the following modifications, namely :—
(i) in sub-section (2),—
(1) the words, brackets, letters and figure "referred to in clause (a) or
clause (b) of sub-section (1) read with the Explanation to that sub-
section" shall be omitted;
(2) for the words "to charitable or religious purposes", the words "for
the purposes of scientific research or research in social science or
statistical research" shall be substituted;
(3) the reference to "Assessing Officer" in clause (a) thereof shall be
construed as a reference to the "prescribed authority" referred to in
clause (ii) or clause (iii) of sub-section (1) of section 35;
(ii) in sub-section (3), in clause (a), for the words "charitable or religious
purposes", the words "the purposes of scientific research or research in
social science or statistical research" shall be substituted; and
(b) does not invest or deposit its funds, other than—
(i) any assets held by the research association where such assets form part of
the corpus of the fund of the association as on the 1st day of June, 1973;
(ii) any assets (being debentures issued by, or on behalf of, any company or
corporation), acquired by the research association before the 1st day of
March, 1983;
(iii) any accretion to the shares, forming part of the corpus of the fund
mentioned in sub-clause (i), by way of bonus shares allotted to the
research association;
(iv) voluntary contributions received and maintained in the form of jewellery,
furniture or any other article as the Board may, by notification in the
Official Gazette, specify,
for any period during the previous year otherwise than in any one or more of
the forms or modes specified in sub-section (5) of section 11:
Provided further that the exemption under this clause shall not be denied in
relation to voluntary contribution, other than voluntary contribution in cash or
voluntary contribution of the nature referred to in clause (b) of the first proviso to
this clause, subject to the condition that such voluntary contribution is not held by
the research association, otherwise than in any one or more of the forms or modes
specified in sub-section (5) of section 11, after the expiry of one year from the end
of the previous year in which such asset is acquired or the 31st day of March, 1992,
whichever is later:
Provided also that nothing contained in this clause shall apply in relation to any
income of the research association, being profits and gains of business, unless the
business is incidental to the attainment of its objectives and separate books of
account are maintained by it in respect of such business:
Provided also that where the research association is approved by the Central
Government and subsequently that Government is satisfied that—
(i) the research association has not applied its income in accordance with the
provisions contained in clause (a) of the first proviso; or
(ii) the research association has not invested or deposited its funds in accordance
with the provisions contained in clause (b) of the first proviso; or
(iii) the activities of the research association are not genuine; or
(iv) the activities of the research association are not being carried out in
accordance with all or any of the conditions subject to which such association
was approved,
it may, at any time after giving a reasonable opportunity of showing cause against
the proposed withdrawal to the concerned association, by order, withdraw the
approval and forward a copy of the order withdrawing the approval to such
association and to the Assessing Officer;
(22) [Omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999;]
(22B) any income of such news agency set up in India solely for collection and
distribution of news as the Central Government may, by notification in the Official
Gazette, specify in this behalf:
Provided that the news agency applies its income or accumulates it for application
solely for collection and distribution of news and does not distribute its income in
any manner to its members:
Provided further that any notification issued by the Central Government under this
clause shall, at any one time, have effect for such assessment year or years, not
exceeding three assessment years (including an assessment year or years
commencing before the date on which such notification is issued) as may be
specified in the notification:
Provided also that where the news agency has been specified, by notification, by
the Central Government and subsequently that Government is satisfied that such
news agency has not applied or accumulated or distributed its income in accordance
with the provisions contained in the first proviso, it may, at any time after giving a
reasonable opportunity of showing cause, rescind the notification and forward a
copy of the order rescinding the notification to such agency and to the Assessing
Officer;
Following fourth proviso shall be inserted after the third proviso to clause
(22B) of section 10 by the Finance Act, 2023, w.e.f. 1-4-2024 :
Provided also that nothing contained in this clause shall apply to any income of the
news agency of the previous year relevant to the assessment year beginning on or
after the 1st day of April, 2024;
(23) [Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]
(23A) any income (other than income chargeable under the head "Income from house
property" or any income received for rendering any specific services or income by
way of interest or dividends derived from its investments) of an association or
institution established in India having as its object the control, supervision,
regulation or encouragement of the profession of law, medicine, accountancy,
engineering or architecture or such other profession as the Central Government may
specify in this behalf, from time to time, by notification in the Official Gazette:
Provided that—
(i) the association or institution applies its income, or accumulates it for
application, solely to the objects for which it is established; and
(ii) the association or institution is for the time being approved for the purpose of
this clause by the Central Government by general or special order:
Provided further that where the association or institution has been approved by the
Central Government and subsequently that Government is satisfied that—
(i) such association or institution has not applied or accumulated its income in
accordance with the provisions contained in the first proviso; or
(ii) the activities of the association or institution are not being carried out in
accordance with all or any of the conditions subject to which such association
or institution was approved,
the proposed withdrawal to the concerned association or institution, by order,
withdraw the approval and forward a copy of the order withdrawing the approval to
such association or institution and to the Assessing Officer;
(23AA) any income received by any person on behalf of any Regimental Fund or Non-
Public Fund established by the armed forces of the Union for the welfare of the past
and present members of such forces or their dependants;
(23AAA) any income received by any person on behalf of a fund established, for such
purposes as may be notified by the Board in the Official Gazette, for the welfare of
employees or their dependants and of which fund such employees are members if
such fund fulfils the following conditions, namely :—
(a) the fund—
(i) applies its income or accumulates it for application, wholly and
exclusively to the objects for which it is established; and
(ii) invests its funds and contributions and other sums received by it in the
forms or modes specified in sub-section (5) of section 11;
(b) the fund is approved by the Principal Commissioner or Commissioner in
accordance with the rules65 made in this behalf:
Provided that any such approval shall at any one time have effect for such
assessment year or years not exceeding three assessment years as may be specified
in the order of approval;
(23AAB) any income of a fund, by whatever name called, set up by the Life Insurance
Corporation of India on or after the 1st day of August, 1996 or any other insurer
under a pension scheme,—
(i) to which contribution is made by any person for the purpose of receiving
pension from such fund;
(ii) which is approved by the Controller of Insurance or the Insurance Regulatory
and Development Authority established under sub-section (1) of section 3 of
the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999),
as the case may be.
Explanation.—For the purposes of this clause, the expression "Controller of
Insurance" shall have the meaning assigned to it in clause (5B) of section 2 of the
Insurance Act, 1938 (4 of 1938);
(23B) any income of an institution constituted as a public charitable trust or registered
under the Societies Registration Act, 1860 (21 of 1860), or under any law
corresponding to that Act in force in any part of India, and existing solely for the
development of khadi or village industries or both, and not for purposes of profit, to
the extent such income is attributable to the business of production, sale, or
marketing, of khadi or products of village industries:
Provided that—
(i) the institution applies its income, or accumulates it for application, solely for
the development of khadi or village industries or both; and
(ii) the institution is, for the time being, approved for the purpose of this clause
by the Khadi and Village Industries Commission:
Provided further that the Commission shall not, at any one time, grant such
approval for more than three assessment years beginning with the assessment year
next following the financial year in which it is granted:
Provided also that where the institution has been approved by the Khadi and
Village Industries Commission and subsequently that Commission is satisfied that
—
(i) the institution has not applied or accumulated its income in accordance with
the provisions contained in the first proviso; or
(ii) the activities of the institution are not being carried out in accordance with all
or any of the conditions subject to which such institution was approved,
the proposed withdrawal to the concerned institution, by order, withdraw the
approval and forward a copy of the order withdrawing the approval to such
institution and to the Assessing Officer.
(i) "Khadi and Village Industries Commission" means the Khadi and Village
Industries Commission established under the Khadi and Village Industries
Commission Act, 1956 (61 of 1956);
(ii) "khadi" and "village industries" have the meanings respectively assigned to
them in that Act;
(23BB) any income of an authority (whether known as the Khadi and Village Industries
Board or by any other name) established in a State by or under a State or Provincial
Act for the development of khadi or village industries in the State.
Explanation.—For the purposes of this clause, "khadi" and "village industries" have
the meanings respectively assigned to them in the Khadi and Village Industries
Commission Act, 1956 (61 of 1956);
(23BBA) any income of any body or authority (whether or not a body corporate or
corporation sole) established, constituted or appointed by or under any Central,
State or Provincial Act which provides for the administration of any one or more of
the following, that is to say, public religious or charitable trusts or endowments
(including maths, temples, gurdwaras, wakfs, churches, synagogues, agiaries or
other places of public religious worship) or societies for religious or charitable
purposes registered as such under the Societies Registration Act, 1860 (21 of 1860),
or any other law for the time being in force:
Provided that nothing in this clause shall be construed to exempt from tax the
income of any trust, endowment or society referred to therein;
(23BBB) any income of the European Economic Community derived in India by way of
interest, dividends or capital gains from investments made out of its funds under
such scheme as the Central Government may, by notification in the Official
Gazette, specify in this behalf.
Explanation.—For the purposes of this clause, "European Economic Community"
means the European Economic Community established by the Treaty of Rome of
25th March, 1957;
(23BBC) any income of the SAARC Fund for Regional Projects set up by Colombo
Declaration issued on the 21st day of December, 1991 by the Heads of State or
Government of the Member Countries of South Asian Association for Regional
Cooperation established on the 8th day of December, 1985 by the Charter of the
South Asian Association for Regional Cooperation;
(23BBD) any income of the Secretariat of the Asian Organisation of the Supreme Audit
Institutions registered as "ASOSAI-SECRETARIAT" under the Societies
Registration Act, 1860 (21 of 1860) for ten previous years relevant to the
assessment years beginning on the 1st day of April, 2001 and ending on the 31st
day of March, 2011;
(23BBE) any income of the Insurance Regulatory and Development Authority established
under sub-section (1) of section 3 of the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999);
(23BBF) 66[***]
(23BBG) any income of the Central Electricity Regulatory Commission constituted under
sub-section (1) of section 76 of the Electricity Act, 2003 (36 of 2003);
(23BBH) any income of the Prasar Bharati (Broadcasting Corporation of India) established
under sub-section (1) of section 3 of the Prasar Bharati (Broadcasting Corporation
of India) Act, 1990 (25 of 1990);
67
(23C) any income received by any person on behalf of—
(i) the Prime Minister's National Relief Fund or the Prime Minister's Citizen
Assistance and Relief in Emergency Situations Fund (PM CARES FUND); or
(ii) the Prime Minister's Fund (Promotion of Folk Art); or
(iii) the Prime Minister's Aid to Students Fund; or
(iiia) the National Foundation for Communal Harmony; or
(iiiaa) the Swachh Bharat Kosh, set up by the Central Government; or
(iiiaaa) the Clean Ganga Fund, set up by the Central Government; or
(iiiaaaa) the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund in
respect of any State or Union territory as referred to in sub-clause (iiihf) of
clause (a) of sub-section (2) of section 80G; or
(iiiab) any university or other educational institution existing solely for educational
purposes and not for purposes of profit, and which is wholly or substantially
financed by the Government68; or
(iiiac) any hospital or other institution for the reception and treatment of persons
suffering from illness or mental defectiveness or for the reception and
treatment of persons during convalescence or of persons requiring medical
attention or rehabilitation, existing solely for philanthropic purposes and not
for purposes of profit, and which is wholly or substantially financed by the
Government68.
Explanation.—For the purposes of sub-clauses (iiiab) and (iiiac), any
university or other educational institution, hospital or other institution referred
therein, shall be considered as being substantially financed by the
Government for any previous year, if the Government grant to such university
or other educational institution, hospital or other institution exceeds such
percentage of the total receipts including any voluntary contributions, as may
be prescribed68, of such university or other educational institution, hospital or
other institution, as the case may be, during the relevant previous year; or
(iiiad) any university or other educational institution existing solely for educational
purposes and not for purposes of profit if the aggregate annual 69[receipts of
the person from such university or universities or educational institution or
educational institutions do not exceed five crore rupees]; or
(iiiae) any hospital or other institution for the reception and treatment of persons
for purposes of profit, if the aggregate annual 70[receipts of the person from
such hospital or hospitals or institution or institutions do not exceed five crore
rupees.]
71
[Explanation.—For the purposes of sub-clauses (iiiad) and (iiiae), it is
hereby clarified that if the person has receipts from university or universities
or educational institution or institutions as referred to in sub-clause (iiiad), as
well as from hospital or hospitals or institution or institutions as referred to in
sub-clause (iiiae), the exemptions under these clauses shall not apply, if the
aggregate of annual receipts of the person from such university or universities
or educational institution or institutions or hospital or hospitals or institution
or institutions, exceed five crore rupees; or]
(iv) any other fund or institution established for charitable purposes which may be
approved by the 72[Principal Commissioner or Commissioner], having regard
to the objects of the fund or institution and its importance throughout India or
throughout any State or States; or
(v) any trust (including any other legal obligation) or institution wholly for public
religious purposes or wholly for public religious and charitable purposes,
which may be approved by the 72[Principal Commissioner or Commissioner],
having regard to the manner in which the affairs of the trust or institution are
administered and supervised for ensuring that the income accruing thereto is
properly applied for the objects thereof;
(vi) any university or other educational institution existing solely for educational
purposes and not for purposes of profit, other than those mentioned in sub-
clause (iiiab) or sub-clause (iiiad) and which may be approved by
the 72[Principal Commissioner or Commissioner]; or
(via) any hospital or other institution for the reception and treatment of persons
for purposes of profit, other than those mentioned in sub-clause (iiiac) or sub-
clause (iiiae) and which may be approved by the 73[Principal Commissioner or
Commissioner] :
Provided that the exemption to the fund or trust or institution or university or other
educational institution or hospital or other medical institution referred to in sub-
clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), under the
respective sub-clauses, shall not be available to it unless such fund or trust or
institution or university or other educational institution or hospital or other medical
institution makes an application in the prescribed form and manner to the Principal
Commissioner or Commissioner, for grant of approval,—
(i) where such fund or trust or institution or university or other educational
institution or hospital or other medical institution is approved under the
second proviso [as it stood immediately before its amendment by the Taxation
and Other Laws (Relaxation and Amendment of Certain Provisions) Act,
2020], within three months from the 1st day of April, 2021;
(ii) where such fund or trust or institution or university or other educational
institution or hospital or other medical institution is approved and the period
of such approval is due to expire, at least six months prior to expiry of the said
period;
(iii) where such fund or trust or institution or university or other educational
institution or hospital or other medical institution has been provisionally
approved, at least six months prior to expiry of the period of the provisional
approval or within six months of commencement of its activities, whichever is
earlier;
74
[(iv) in any other case, where activities of the fund or trust or institution or
university or other educational institution or hospital or other medical
institution have—
(A) not commenced, at least one month prior to the commencement of the
previous year relevant to the assessment year from which the said
approval is sought;
(B) commenced and no income or part thereof of the said fund or trust or
institution or university or other educational institution or hospital or
other medical institution has been excluded from the total income on
account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause
(vi) or sub-clause (via) or section 11 or section 12 for any previous year
ending on or before the date of such application, at any time after the
commencement of such activities,]
and the said fund or trust or institution or university or other educational institution
or hospital or other medical institution is approved under the second proviso:
Provided further that the Principal Commissioner or Commissioner, on receipt of
an application made under the first proviso, shall,—
(i) where the application is made under clause (i) of the said proviso, pass an
order in writing granting approval to it for a period of five years;
(ii) where the application is made under clause (ii) or clause (iii) 75[or sub-clause
(B) of clause (iv)] of the said proviso,—
(a) call for such documents or information from it or make such inquiries as
he thinks necessary in order to satisfy himself about—
(A) the genuineness of activities of such fund or trust or institution or
university or other educational institution or hospital or other
medical institution; and
(B) the compliance of such requirements of any other law for the time
being in force by it as are material for the purpose of achieving its
objects; and
(b) after satisfying himself about the objects and the genuineness of its
activities under item (A), and compliance of the requirements under item
(B), of sub-clause (a),—
(A) pass an order in writing granting approval to it for a period of five
years;
76
[(B) if he is not so satisfied, pass an order in writing,—
(I) in a case referred to in clause (ii) or clause (iii) of the first
proviso, rejecting such application and also cancelling its
approval;
(II) in a case referred to in sub-clause (B) of clause (iv) of the first
proviso, rejecting such application,
after affording it a reasonable opportunity of being heard;]
77
[(iii) where the application is made under sub-clause (A) of clause (iv) of the said
proviso or the application made under clause (iv) of the said proviso, as it
stood immediately before its amendment by the Finance Act, 2023, pass an
order in writing granting approval to it provisionally for a period of three
years from the assessment year from which the approval is sought, and send a
copy of such order to the fund or trust or institution or university or other
educational institution or hospital or other medical institution:]
Provided also that the fund or trust or institution or any university or other
educational institution or any hospital or other medical institution referred to
in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via)—
(a) applies its income, or accumulates it for application, wholly and
exclusively to the objects for which it is established and in a case
where more than fifteen per cent of its income is accumulated on or
after the 1st day of April, 2002, the period of the accumulation of the
amount exceeding fifteen per cent of its income shall in no case
exceed five years; and
(b) does not invest or deposit its funds, other than—
(i) any assets held by the fund, trust or institution or any university
or other educational institution or any hospital or other medical
institution where such assets form part of the corpus of the
fund, trust or institution or any university or other educational
institution or any hospital or other medical institution as on the
1st day of June, 1973;
(ia) any asset, being equity shares of a public company, held by any
university or other educational institution or any hospital or
other medical institution where such assets form part of the
corpus of any university or other educational institution or any
hospital or other medical institution as on the 1st day of June,
1998;
(ii) any assets (being debentures issued by, or on behalf of, any
company or corporation), acquired by the fund, trust or
institution or any university or other educational institution or
any hospital or other medical institution before the 1st day of
March, 1983;
(iii) any accretion to the shares, forming part of the corpus
mentioned in sub-clause (i) and sub-clause (ia), by way of
bonus shares allotted to the fund, trust or institution or any
university or other educational institution or any hospital or
other medical institution ;
(iv) voluntary contributions received and maintained in the form of
jewellery, furniture or any other article as the Board may, by
notification in the Official Gazette, specify,
for any period during the previous year otherwise than in any one or more of
the forms or modes specified in sub-section (5) of section 11.
78
[Explanation 1].—For the removal of doubts, it is hereby clarified that for the
purposes of this proviso, the income of the funds or trust or institution or any
university or other educational institution or any hospital or other medical
institution, shall not include income in the form of voluntary contributions made
with a specific direction that they shall form part of the corpus of such fund or trust
or institution or any university or other educational institution or any hospital or
other medical institution 79[subject to the condition that such voluntary contributions
are invested or deposited in one or more of the forms or modes specified in sub-
section (5) of section 11 maintained specifically for such corpus].
80
[Explanation 1A.—For the purposes of this proviso, where the property held under
a trust or institution referred to in clause (v) includes any temple, mosque,
gurdwara, church or other place notified under clause (b) of sub-section (2)
of section 80G, any sum received by such trust or institution as a voluntary
contribution for the purpose of renovation or repair of such temple, mosque,
gurdwara, church or other place, may, at its option, be treated by such trust or
institution as forming part of the corpus of that trust or institution, subject to the
condition that the trust or institution,—
(a) applies such corpus only for the purpose for which the voluntary contribution
was made;
(b) does not apply such corpus for making contribution or donation to any
person;
(c) maintains such corpus as separately identifiable; and
(d) invests or deposits such corpus in the forms and modes specified under sub-
section (5) of section 11.
Explanation 1B.—For the purposes of Explanation 1A, where any trust or institution
referred to in sub-clause (v) has treated any sum received by it as forming part of
the corpus, and subsequently any of the conditions specified in clause (a) or clause
(b) or clause (c) or clause (d) of the said Explanation is violated, such sum shall be
deemed to be the income of such trust or institution of the previous year during
which the violation takes place.]
81
[Explanation 2.—For the purposes of determining the amount of application under
this proviso,—
(i) application for charitable or religious purposes from the corpus as referred to
in Explanation 1, shall not be treated as application of income for charitable
or religious purposes:
Provided that the amount not so treated as application or part thereof, shall be
treated as application for charitable or religious purposes in the previous year
in which the amount, or part thereof, is invested or deposited back, into one or
more of the forms or modes specified in sub-section (5) of section
11 maintained specifically for such corpus, from the income of that year and
to the extent of such investment or deposit: 82[***]
83
[Provided further that the provisions of the first proviso shall apply only if
there was no violation of the conditions specified in the twelfth, thirteenth and
twenty-first provisos, and those specified in Explanation 2 and Explanation 3,
of this clause, at the time the application was made from the corpus:
Provided also that the amount invested or deposited back shall not be treated
as application for charitable or religious purposes under the first proviso
unless such investment or deposit is made within a period of five years from
the end of the previous year in which such application was made from the
corpus:
Provided also that nothing contained in the first proviso shall apply where
the application from the corpus is made on or before the 31st day of March,
2021;]
(ii) application for charitable or religious purposes, from any loan or borrowing,
shall not be treated as application of income for charitable or religious
purposes:
Provided that the amount not so treated as application or part thereof, shall be
treated as application for charitable or religious purposes in the previous year
in which the loan or borrowing, or part thereof, is repaid from the income of
that year and to the extent of such repayment:]
83a
[Provided further that the provisions of the first proviso shall apply only if
there was no violation of the conditions specified in the twelfth, thirteenth and
twenty-first provisos, and those specified in Explanation 2 and Explanation 3,
of this clause at the time the application was made from loan or borrowing:
Provided also that the amount repaid shall not be treated as application for
charitable or religious purposes under the first proviso unless such repayment
is made within a period of five years from the end of the previous year in
which such application was made from loan or borrowing:
Provided also that nothing contained in the first proviso shall apply where
the application from any loan or borrowing is made on or before the 31st day
of March, 2021; and]
Following clause (iii) shall be inserted after clause (ii) in Explanation 2 to
third proviso to clause (23C) of section 10 by the Finance Act, 2023, w.e.f.
1-4-2024 :
(iii) any amount credited or paid out of the income of any fund or trust or
institution or any university or other educational institution or any hospital or
other medical institution referred to in sub-clause (iv) or sub-clause (v) or
sub-clause (vi) or sub-clause (via), other than the amount referred to in the
twelfth proviso, to any other fund or trust or institution or any university or
other educational institution or any hospital or other medical institution
referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via), or trust or institution registered under section 12AB, as the case
may be, shall be treated as application for charitable or religious purposes
only to the extent of eighty-five per cent of such amount credited or paid.
84
[Explanation 3.—For the purposes of determining the amount of application under
this proviso, where eighty-five per cent of the income referred to in clause (a) of this
proviso is not applied wholly and exclusively to the objects for which the fund or
institution or trust or any university or other educational institution or any hospital
or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-
clause (vi) or sub-clause (via) is established, during the previous year but is
accumulated or set apart, either in whole or in part, for application to such objects,
such income so accumulated or set apart shall not be included in the total income of
the previous year of the person in receipt of the income, if the following conditions
are complied with, namely:—
(a) such person furnishes a statement in such form and manner, as may be
prescribed85, to the Assessing Officer stating the purpose for which the income
is being accumulated or set apart and the period for which the income is to be
accumulated or set apart, which shall in no case exceed five years;
(b) the money so accumulated or set apart is invested or deposited in the forms
or modes specified in sub-section (5) of section 11; and
(c) the statement referred to in clause (a) is 86[furnished at least two months prior
to] the due date specified under sub-section (1) of section 139 for furnishing
the return of income for the previous year:
Provided that in computing the period of five years referred to in clause (a), the
period during which the income could not be applied for the purpose for which it is
so accumulated or set apart, due to an order or injunction of any court, shall be
excluded.
Explanation 4.—Any income referred to in Explanation 3, which,—
(a) is applied for purposes other than wholly and exclusively to the objects for
which the fund or institution or trust or any university or other educational
institution or any hospital or other medical institution referred to in sub-
clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) is
established or ceases to be accumulated or set apart for application thereto;
or
(b) ceases to remain invested or deposited in any of the forms or modes specified
in sub-section (5) of section 11; or
(c) is not utilised for the purpose for which it is so accumulated or set apart
during the period referred to in clause (a) of Explanation 3; or
(d) is credited or paid to any trust or institution registered under section
12AA or section 12AB or to any fund or institution or trust or any university
or other educational institution or any hospital or other medical institution
referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via),
shall be deemed to be the income of such person of the previous year—
(i) in which it is so applied or ceases to be so accumulated or set apart under
clause (a); or
(ii) in which it ceases to remain so invested or deposited under clause (b); or
(iii) being the last previous year of the period, for which the income is
accumulated or set apart under clause (a) of Explanation 3, but not utilised
for the purpose for which it is so accumulated or set apart under clause (c);
or
(iv) in which it is credited or paid to any fund or institution or trust or any
institution under clause (d).
Explanation 5.—Notwithstanding anything contained in Explanation 4, where due to
circumstances beyond the control of the person in receipt of the income, any income
invested or deposited in accordance with the provisions of clause (b) of Explanation
3 cannot be applied for the purpose for which it was accumulated or set apart, the
Assessing Officer may, on an application made to him in this behalf, allow such
person to apply such income for such other purpose in India as is specified in the
application by that person and as is in conformity with the objects for which the
fund or institution or trust or any university or other educational institution or any
hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v)
or sub-clause (vi) or sub-clause (via) is established; and thereupon the provisions
of Explanation 4 shall apply as if the purpose specified by that person in the
application under this Explanation were a purpose specified in the notice given to
the Assessing Officer under clause (a) of Explanation 3:
Provided that the Assessing Officer shall not allow application of such income by
way of payment or credit made for the purposes referred to in clause (d)
of Explanation 4 :]
Provided also that the exemption under sub-clause (iv) or sub-clause (v) shall not
be denied in relation to any funds invested or deposited before the 1st day of April,
1989, otherwise than in any one or more of the forms or modes specified in sub-
section (5) of section 11 if such funds do not continue to remain so invested or
deposited after the 30th day of March, 1993 :
Provided also that the exemption under sub-clause (vi) or sub-clause (via) shall not
be denied in relation to any funds invested or deposited before the 1st day of June,
1998, otherwise than in any one or more of the forms or modes specified in sub-
section (5) of section 11 if such funds do not continue to remain so invested or
deposited after the 30th day of March, 2001:
Provided also that the exemption under sub-clause (iv) or sub-clause (v) or sub-
clause (vi) or sub-clause (via) shall not be denied in relation to voluntary
contribution, other than voluntary contribution in cash or voluntary contribution of
the nature referred to in clause (b) of the third proviso to this sub-clause, subject to
the condition that such voluntary contribution is not held by the trust or institution
or any university or other educational institution or any hospital or other medical
institution, otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section 11, after the expiry of one year from the end of the
previous year in which such asset is acquired or the 31st day of March, 1992,
whichever is later:
Provided also that nothing contained in sub-clause (iv) or sub-clause (v) or sub-
clause (vi) or sub-clause (via) shall apply in relation to any income of the fund or
trust or institution or any university or other educational institution or any hospital
or other medical institution, being profits and gains of business, unless the business
is incidental to the attainment of its objectives and separate books of account are
maintained by it in respect of such business:
Provided also that any approval granted under the second proviso shall apply in
relation to the income of the fund or trust or institution or university or other
educational institution or hospital or other medical institution,—
(i) where the application is made under clause (i) of the first proviso, from the
assessment year from which approval was earlier granted to it;
(ii) where the application is made under clause (iii) of the first proviso, from the
first of the assessment years for which it was provisionally approved;
(iii) in any other case, from the assessment year immediately following the
financial year in which such application is made:
Provided also that the order under clause (i), sub-clause (b) of clause (ii) and clause
(iii) of the second proviso shall be passed, in such form and manner as may be
prescribed, before expiry of the period of three months, six months and one month,
respectively, calculated from the end of the month in which the application was
received:
87
[Provided also that where the total income of the fund or institution or trust or
any university or other educational institution or any hospital or other medical
institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via), without giving effect to the provisions of the said sub-clauses, exceeds
the maximum amount which is not chargeable to tax in any previous year, such fund
or institution or trust or any university or other educational institution or any
hospital or other medical institution shall,—
(a) keep and maintain books of account and other documents in such form and
manner and at such place, as may be prescribed88; and
(b) get its accounts audited in respect of that year by an accountant as defined in
the Explanation below sub-section (2) of section 288 before the specified date
referred to in section 44AB and furnish by that date, the report of such audit
in the prescribed form duly signed and verified by such accountant and setting
forth such particulars as may be prescribed89:]
Provided also that any amount of donation received by the fund or institution in
terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of
income and expenditure have not been rendered to the authority prescribed under
clause (v) of sub-section (5C) of that section, in the manner specified in that clause,
or which has been utilised for purposes other than providing relief to the victims of
earthquake in Gujarat or which remains unutilised in terms of sub-section (5C)
of section 80G and not transferred to the Prime Minister's National Relief Fund on
or before the 31st day of March, 2004 shall be deemed to be the income of the
previous year and shall accordingly be charged to tax:
Provided also that any amount credited or paid out of income of any fund or trust
or institution or any university or other educational institution or any hospital or
other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-
clause (vi) or sub-clause (via), to any other fund or trust or institution or any
institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-
clause (via) or trust or institution registered under section 12AA or section 12AB,
being voluntary contribution made with a specific direction that they shall form part
of the corpus, shall not be treated as application of income to the objects for which
such fund or trust or institution or university or educational institution or hospital or
other medical institution, as the case may be, is established:
Provided also that for the purposes of determining the amount of application under
item (a) of the third proviso, the provisions of sub-clause (ia) of clause (a)
of section 40 and sub-sections (3) and (3A) of section 40A, shall, mutatis mutandis,
apply as they apply in computing the income chargeable under the head "Profits and
gains of business or profession":
Provided also that where the fund or trust or institution or any university or other
educational institution or any hospital or other medical institution referred to in sub-
clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) does not apply its
income during the year of receipt and accumulates it, any payment or credit out of
such accumulation to any trust or institution registered under section
12AA 90[or section 12AB] or to any fund or trust or institution or any university or
other educational institution or any hospital or other medical institution referred to
in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall not be
treated as application of income to the objects for which such fund or trust or
institution or university or educational institution or hospital or other medical
institution, as the case may be, is established:
91
[Provided also that where the fund or institution referred to in sub-clause (iv) or
trust or institution referred to in sub-clause (v) or any university or other educational
institution referred to in sub-clause (vi) or any hospital or other medical institution
referred to in sub-clause (via) is approved or provisionally approved under the said
clause and subsequently—
(a) the Principal Commissioner or Commissioner has noticed occurrence of one
or more specified violations during any previous year; or
(b) the Principal Commissioner or Commissioner has received a reference from
the Assessing Officer under the second proviso to sub-section (3) of section
143 for any previous year; or
(c) such case has been selected in accordance with the risk management strategy,
formulated by the Board from time to time, for any previous year,
the Principal Commissioner or Commissioner, shall,—
(i) call for such documents or information from the fund or institution or trust or
any university or other educational institution or any hospital or other medical
institution, or make such inquiry as he thinks necessary in order to satisfy
himself about the occurrence of any specified violation;
(ii) pass an order in writing cancelling the approval of such fund or institution or
trust or any university or other educational institution or any hospital or other
medical institution, on or before the specified date, after affording a
reasonable opportunity of being heard, for such previous year and all
subsequent previous years, if he is satisfied that one or more specified
violation has taken place;
(iii) pass an order in writing refusing to cancel the approval of such fund or
institution or trust or any university or other educational institution or any
hospital or other medical institution, on or before the specified date, if he is
not satisfied about the occurrence of one or more specified violations;
(iv) forward a copy of the order under clause (ii) or clause (iii), as the case may
be, to the Assessing Officer and such fund or institution or trust or any
institution.
Explanation 1.—For the purposes of this proviso, "specified date" shall mean the
day on which the period of six months, calculated from the end of the quarter in
which the first notice is issued by the Principal Commissioner or Commissioner, on
or after the 1st day of April, 2022, calling for any document or information, or for
making any inquiry, under clause (i) expires.
Explanation 2.—For the purposes of this proviso, the following shall mean
"specified violation",—
(a) where any income of the fund or institution or trust or any university or other
educational institution or any hospital or other medical institution has been
applied other than for the objects for which it is established; or
(b) the fund or institution or trust or any university or other educational
institution or any hospital or other medical institution has income from profits
and gains of business, which is not incidental to the attainment of its
objectives or separate books of account are not maintained by it in respect of
the business which is incidental to the attainment of its objectives; or
(c) any activity of the fund or institution or trust or any university or other
educational institution or any hospital or other medical institution,—
(A) is not genuine; or
(B) is not being carried out in accordance with all or any of the conditions
subject to which it was notified or approved; or
(d) the fund or institution or trust or any university or other educational
institution or any hospital or other medical institution has not complied with
the requirement of any other law for the time being in force, and the order,
direction or decree, by whatever name called, holding that such non-
compliance has occurred, has either not been disputed or has 92[attained
finality; or]
93
[(e) the application referred to in the first proviso of this clause is not complete or
it contains false or incorrect information.]
Explanation 3.—For the purposes of clause (b) of this proviso, where the Assessing
Officer has intimated the Central Government or the prescribed authority under the
first proviso of sub-section (3) of section 143 about the contravention of the
provisions of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via)
of this clause by any fund or institution or trust or university or other educational
institution or any hospital or other medical institution in respect of an assessment
year, and the approval granted to such fund or institution or trust or university or
other educational institution or any hospital or other medical institution has not been
withdrawn, or the notification issued in its case has not been rescinded, on or before
the 31st day of March, 2022, such intimation shall be deemed to be a reference
received by the Principal Commissioner or Commissioner as on the 1st day of
April, 2022, and the provisions of clause (b) of the second proviso to sub-section (3)
of section 143 shall apply accordingly for such assessment year:]
Provided also that any anonymous donation referred to in section 115BBC on
which tax is payable in accordance with the provisions of the said section shall be
included in the total income :
Provided also that all applications made under the first proviso [as it stood before
its amendment by the Taxation and Other Laws (Relaxation and Amendment of
Certain Provisions) Act, 2020] pending before the Principal Commissioner or
Commissioner, on which no order has been passed before the 1st day of April,
2021, shall be deemed to be applications made under clause (iv) of the first proviso
on that date:
Provided also that the income of a trust or institution referred to in sub-clause (iv)
or sub-clause (v) shall be included in its total income of the previous year if the
provisions of the first proviso to clause (15) of section 2 become applicable to such
trust or institution in the said previous year, whether or not any approval granted or
notification issued in respect of such trust or institution has been withdrawn or
rescinded :
94
[Provided also that where the fund or institution referred to in sub-clause (iv) or
the trust or institution referred to in sub-clause (v) or any university or other
educational institution referred to in sub-clause (vi) or any hospital or other medical
institution referred to in sub-clause (via) has been approved by the Principal
Commissioner or Commissioner, and the approval is in force for any previous year,
then, nothing contained in any other provision of this section, other than clause (1)
thereof, shall operate to exclude any income received on behalf of such fund or
institution or trust or university or other educational institution or hospital or other
medical institution, as the case may be, from the total income of the person in
receipt thereof for that previous year.
Explanation.—Where, on or after the 1st day of April, 2022 any fund or institution
referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v)
or any university or other educational institution referred to in sub-clause (vi) or any
hospital or other medical institution referred to in sub-clause (via) is notified under
clause (46) 95[or (46A)] of section 10, the approval or provisional approval granted
to such fund or institution or trust or university or other educational institution or
hospital or other medical institution shall become inoperative from the date of
notification of such fund or institution or trust or university or other educational
institution or hospital or other medical institution, as the case may be, under clause
(46) 95a[or clause (46A)] of the said section:]
96
[Provided also that the fund or institution or trust or any university or other
educational institution or any hospital or other medical institution referred to in
sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall furnish
the return of income for the previous year in accordance with the provisions of sub-
section (4C) of section 139, 97[within the time allowed under sub-section (1) or sub-
section (4) of that section] :
Provided also that where the income or part of income or property of any fund or
clause (vi) or sub-clause (via), has been applied directly or indirectly for the benefit
of any person referred to in sub-section (3) of section 13, such income or part of
income or property shall, after taking into account the provisions of sub-sections
(2), (4) and (6) of the said section, be deemed to be the income of such fund or
institution or trust or university or other educational institution or hospital or other
medical institution of the previous year in which it is so applied:
Provided also that where any fund or institution or trust or any university or other
educational institution or any hospital or other medical institution referred to in
sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) violates the
conditions of the tenth proviso or twentieth proviso, or where the provisions of the
eighteenth proviso are applicable, its income chargeable to tax shall be computed
after allowing deduction for the expenditure (other than capital expenditure)
incurred in India, for the objects of the fund or institution or trust or university or
other educational institution or hospital or other medical institution, subject to
fulfilment of the following conditions, namely:—
(a) such expenditure is not from the corpus standing to the credit of the fund or
institution or trust or university or other educational institution or hospital or
other medical institution as on the end of the financial year immediately
preceding the previous year relevant to the assessment year for which the
income is being computed;
(b) such expenditure is not from any loan or borrowing;
(c) claim of depreciation is not in respect of an asset, acquisition of which has
been claimed as application of income in the same or any other previous
year; and
(d) such expenditure is not in the form of any contribution or donation to any
person.
Explanation.—For the purposes of determining the amount of expenditure under
this proviso, the provisions of sub-clause (ia) of clause (a) of section 40 and sub-
sections (3) and (3A) of section 40A shall, mutatis mutandis, apply as they apply in
computing the income chargeable under the head "Profits and gains of business or
profession":
Provided also that for the purposes of computing income chargeable to tax under
the twenty-second proviso, no deduction in respect of any expenditure or allowance
or set-off of any loss shall be allowed to the assessee under any other provision of
this Act.]
98
[Explanation 1].—In this clause, where any income is required to be applied or
accumulated, then, for such purpose the income shall be determined without any
deduction or allowance by way of depreciation or otherwise in respect of any asset,
acquisition of which has been claimed as an application of income under this clause
in the same or any other previous year.
99
[Explanation 2.—For the purposes of this clause, it is clarified that the calculation
of income required to be applied or accumulated during the previous year shall be
made without any set off or deduction or allowance of any excess application of any
of the year preceding to the previous year.]
1
[Explanation 3.—For the purposes of this clause, any sum payable by any fund or
clause (vi) or sub-clause (via) shall be considered as application of income during
the previous year in which such sum is actually paid by it (irrespective of the
previous year in which the liability to pay such sum was incurred by the fund or
or other medical institution according to the method of accounting regularly
employed by it):
Provided that where during any previous year any sum has been claimed to have
been applied by the fund or institution or trust or any university or other educational
institution or any hospital or other medical institution, such sum shall not be
allowed as application in any subsequent previous year;]
(23D) any income of—
(i) a Mutual Fund registered under the Securities and Exchange Board of India
Act, 1992 (15 of 1992) or regulations made thereunder;
(ii) such other Mutual Fund set up by a public sector bank or a public financial
institution or authorised by the Reserve Bank of India and subject to such
conditions as the Central Government may, by notification in the Official
Gazette, specify in this behalf.
(a) the expression "public sector bank" means the State Bank of India constituted
under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as
defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959),
a corresponding new Bank constituted under section 3 of the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970),
or under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980) and a bank included in the category
"other public sector banks" by the Reserve Bank of India;
(b) the expression "public financial institution" shall have the meaning assigned
to it in section 4A of the Companies Act, 1956 (1 of 1956)2;
(c) the expression "Securities and Exchange Board of India" shall have the
meaning assigned to it in clause (a) of sub-section (1) of section 2 of the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(23DA) any income of a securitisation trust from the activity of securitisation.
(a) "securitisation" shall have the same meaning as assigned to it,—
(i) in clause (r) of sub-regulation (1) of regulation 22a of the Securities and
Exchange Board of India (Public Offer and Listing of Securitised Debt
Instruments) Regulations, 2008 made under the Securities and Exchange
Board of India Act, 1992 (15 of 1992) and the Securities Contracts
(Regulation) Act, 1956 (42 of 1956); or
(ia) in clause (z) of sub-section (1) of section 2 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (54 of 2002); or
(ii) under the guidelines on securitisation of standard assets issued by the
Reserve Bank of India;
(b) "securitisation trust" shall have the meaning assigned to it in
the Explanation below section 115TCA;
(23E) [Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]
(23EA) any income, by way of contributions received from recognised stock exchanges and
the members thereof, of such Investor Protection Fund set up by recognised stock
exchanges in India, either jointly or separately, as the Central Government may, by
notification in the Official Gazette, specify in this behalf:
Provided that where any amount standing to the credit of the Fund and not charged
to income-tax during any previous year is shared, either wholly or in part, with a
recognised stock exchange, the whole of the amount so shared shall be deemed to
be the income of the previous year in which such amount is so shared and shall
accordingly be chargeable to income-tax;
(23EB) 3[***]
(23EC) any income, by way of contributions received from commodity exchanges and the
members thereof, of such Investor Protection Fund set up by commodity exchanges
in India, either jointly or separately, as the Central Government may, by notification
in the Official Gazette, specify in this behalf:
Provided that where any amount standing to the credit of the said Fund and not
charged to income-tax during any previous year is shared, either wholly or in part,
with a commodity exchange, the whole of the amount so shared shall be deemed to
be the income of the previous year in which such amount is so shared and shall
accordingly be chargeable to income-tax.
Explanation.—For the purposes of this clause, "commodity exchange" shall mean a
"registered association" as defined in clause (jj) of section 2 of the Forward
Contracts (Regulation) Act, 1952 (74 of 1952)4;
(23ED) any income, by way of contributions received from a depository, of such Investor
Protection Fund set up in accordance with the regulations by a depository as the
Central Government may, by notification in the Official Gazette, specify in this
behalf:
to income-tax during any previous year is shared, either wholly or in part with a
depository, the whole of the amount so shared shall be deemed to be the income of
the previous year in which such amount is so shared and shall, accordingly, be
chargeable to income-tax.
(i) "depository" shall have the same meaning as assigned to it in clause (e) of
sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996);
(ii) "regulations" means the regulations made under the Securities and Exchange
Board of India Act, 1992 (15 of 1992) and the Depositories Act, 1996 (22 of
1996);
(23EE) any specified income of such Core Settlement Guarantee Fund, set up by a
recognised clearing corporation in accordance with the regulations, as the Central
Government may, by notification in the Official Gazette, specify in this behalf:
to income-tax during any previous year is shared, either wholly or in part with the
specified person, the whole of the amount so shared shall be deemed to be the
income of the previous year in which such amount is so shared and shall,
accordingly, be chargeable to income-tax.
(i) "recognised clearing corporation" shall have the same meaning as assigned to
it in clause (o) of sub-regulation (1) of regulation 2 of the Securities Contracts
(Regulation) (Stock Exchanges and Clearing Corporations) Regulations,
20124a made under the Securities and Exchange Board of India Act, 1992 (15
of 1992) and the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(ii) "regulations" means the Securities Contracts (Regulation) (Stock Exchanges
and Clearing Corporations) Regulations, 2012 made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) and the Securities Contracts
(Regulation) Act, 1956 (42 of 1956);
(iii) "specified income" shall mean,—
(a) the income by way of contribution received from specified persons;
(b) the income by way of penalties imposed by the recognised clearing
corporation and credited to the Core Settlement Guarantee Fund; or
(c) the income from investment made by the Fund;
(iv) "specified person" shall mean,—
(a) any recognised clearing corporation which establishes and maintains the
Core Settlement Guarantee Fund;
(b) any recognised stock exchange, being a shareholder in such recognised
clearing corporation, or a contributor to the Core Settlement Guarantee
Fund; and
(c) any clearing member contributing to the Core Settlement Guarantee
Fund;
(23F) any income by way of dividends or long-term capital gains of a venture capital fund
or a venture capital company from investments made by way of equity shares in a
venture capital undertaking :
Provided that such venture capital fund or venture capital company is approved for
the purposes of this clause by the prescribed authority5 in accordance with the
rules6 made in this behalf and satisfies the prescribed conditions :
Provided further that any approval by the prescribed authority shall, at any one
time, have effect for such assessment year or years, not exceeding three assessment
years, as may be specified in the order of approval :
Provided also that nothing contained in this clause shall apply in respect of any
investment made after the 31st day of March, 1999.
(a) "venture capital fund" means such fund, operating under a trust deed
registered under the provisions of the Registration Act, 1908 (16 of 1908),
established to raise monies by the trustees for investments mainly by way of
acquiring equity shares of a venture capital undertaking in accordance with
the prescribed guidelines;
(b) "venture capital company" means such company as has made investments by
way of acquiring equity shares of venture capital undertakings in accordance
with the prescribed guidelines;
(c) "venture capital undertaking" means such domestic company whose shares
are not listed in a recognised stock exchange in India and which is engaged in
the business of generation or generation and distribution of electricity or any
other form of power or engaged in the business of providing
telecommunication services or in the business of developing, maintaining and
operating any infrastructure facility or engaged in the manufacture or
production of such articles or things (including computer software) as may be
notified by the Central Government in this behalf; and
(d) "infrastructure facility" means a road, highway, bridge, airport, port, rail
system, a water supply project, irrigation project, sanitation and sewerage
system or any other public facility of a similar nature as may be notified by
the Board in this behalf in the Official Gazette and which fulfils the
conditions specified in sub-section (4A) of section 80-IA;
(23FA) any income by way of dividends, other than dividends referred to in section 115-O,
or long-term capital gains of a venture capital fund or a venture capital company
from investments made by way of equity shares in a venture capital undertaking :
Provided that such venture capital fund or venture capital company is approved, for
the purposes of this clause, by the Central Government on an application made to it
in accordance with the rules7 made in this behalf and which satisfies the prescribed
conditions :
Provided further that any approval by the Central Government shall, at any one
time, have effect for such assessment year or years, not exceeding three assessment
years, as may be specified in the order of approval :
Provided also that nothing contained in this clause shall apply in respect of any
investment made after the 31st day of March, 2000.
(a) "venture capital fund" means such fund, operating under a trust deed
registered under the provisions of the Registration Act, 1908 (16 of 1908),
established to raise monies by the trustees for investments mainly by way of
acquiring equity shares of a venture capital undertaking in accordance with
the prescribed guidelines;
(b) "venture capital company" means such company as has made investments by
way of acquiring equity shares of venture capital undertakings in accordance
with the prescribed guidelines; and
(c) "venture capital undertaking" means such domestic company whose shares
are not listed in a recognised stock exchange in India and which is engaged in
the—
(i) business of—
(A) software;
(B) information technology;
(C) production of basic drugs in the pharmaceutical sector;
(D) bio-technology;
(E) agriculture and allied sectors; or
(F) such other sectors as may be notified by the Central Government in
this behalf; or
(ii) production or manufacture of any article or substance for which patent
has been granted to the National Research Laboratory or any other
scientific research institution approved by the Department of Science and
Technology;
(23FB) any income of a venture capital company or venture capital fund from investment in
a venture capital undertaking :
Provided that nothing contained in this clause shall apply in respect of any income
of a venture capital company or venture capital fund, being an investment fund
specified in clause (a) of the Explanation 1 to section 115UB, of the previous year
relevant to the assessment year beginning on or after the 1st day of April, 2016.
(a) "venture capital company" means a company which—
(A) has been granted a certificate of registration, before the 21st day of May,
2012, as a Venture Capital Fund and is regulated under the Securities and
Exchange Board of India (Venture Capital Funds) Regulations, 1996
(hereinafter referred to as the Venture Capital Funds Regulations) made
under the Securities and Exchange Board of India Act, 1992 (15 of
1992); or
(B) has been granted a certificate of registration as Venture Capital Fund as a
sub-category of Category I Alternative Investment Fund and is regulated
under the Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012 (hereinafter referred to as the
Alternative Investment Funds Regulations) made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992), and which fulfils the
following conditions, namely:—
(i) it is not listed on a recognised stock exchange;
(ii) it has invested not less than two-thirds of its investible funds in
unlisted equity shares or equity linked instruments of venture capital
undertaking; and
(iii) it has not invested in any venture capital undertaking in which its
director or a substantial shareholder (being a beneficial owner of
equity shares exceeding ten per cent of its equity share capital)
holds, either individually or collectively, equity shares in excess of
fifteen per cent of the paid-up equity share capital of such venture
capital undertaking;
(b) "venture capital fund" means a fund—
(A) operating under a trust deed registered under the provisions of the
Registration Act, 1908 (16 of 1908), which—
(I) has been granted a certificate of registration, before the 21st day of
May, 2012, as a Venture Capital Fund and is regulated under the
Venture Capital Funds Regulations; or
(II) has been granted a certificate of registration as Venture Capital
Fund as a sub-category of Category I Alternative Investment Fund
under the Alternative Investment Funds Regulations and which
fulfils the following conditions, namely:—
(i) it has invested not less than two-thirds of its investible funds in
unlisted equity shares or equity linked instruments of venture
capital undertaking;
(ii) it has not invested in any venture capital undertaking in which
its trustee or the settler holds, either individually or collectively,
equity shares in excess of fifteen per cent of the paid-up equity
share capital of such venture capital undertaking; and
(iii) the units, if any, issued by it are not listed in any recognised
stock exchange; or
(B) operating as a venture capital scheme made by the Unit Trust of India
established under the Unit Trust of India Act, 1963 (52 of 1963);
(c) "venture capital undertaking" means—
(i) a venture capital undertaking as defined in clause (n) of regulation 2 of
the Venture Capital Funds Regulations; or
(ii) a venture capital undertaking as defined in clause (aa) of sub-regulation
(1) of regulation 2 of the Alternative Investment Funds Regulations;
(23FBA) any income of an investment fund other than the income chargeable under the head
"Profits and gains of business or profession";
(23FBB) any income referred to in section 115UB, accruing or arising to, or received by, a
unit holder of an investment fund, being that proportion of income which is of the
same nature as income chargeable under the head "Profits and gains of business or
profession".
Explanation.—For the purposes of clauses (23FBA) and (23FBB), the expression
"investment fund" shall have the meaning assigned to it in clause (a) of
the Explanation 1 to section 115UB;
(23FBC) any income accruing or arising to, or received by, a unit holder from a specified
fund or on transfer of units in a specified fund.
Explanation.—For the purposes of this clause, the expressions—
(a) "specified fund" shall have the same meaning as assigned to it in clause (c) of
the Explanation to clause (4D);
(b) "unit" means beneficial interest of an investor in the fund and shall include
shares or partnership interests;
(23FC) any income of a business trust by way of—
(a) interest received or receivable from a special purpose vehicle; or
(b) dividend received or receivable from a special purpose vehicle.
Explanation.—For the purposes of this clause, the expression "special purpose
vehicle" means an Indian company in which the business trust holds controlling
interest and any specific percentage of shareholding or interest, as may be required
by the regulations under which such trust is granted registration;
(23FCA) any income of a business trust, being a real estate investment trust, by way of
renting or leasing or letting out any real estate asset owned directly by such business
trust.
Explanation.—For the purposes of this clause, the expression "real estate asset"
shall have the same meaning as assigned to it in clause (zj) of sub-regulation (1) of
regulation 2 of the Securities and Exchange Board of India (Real Estate Investment
Trusts) Regulations, 2014 made under the Securities and Exchange Board of India
Act, 1992 (15 of 1992);
(23FD) any distributed income, referred to in section 115UA, received by a unit holder from
the business trust, not being that proportion of the income which is of the same
nature as the income referred to in sub-clause (a) of clause (23FC) or sub-clause (b)
of said clause (in a case where the special purpose vehicle has exercised the option
under section 115BAA) or clause (23FCA);
8
(23FE) any income of a specified person in the nature of dividend, interest 9[, any sum
referred to in clause (xii) of sub-section (2) of section 56] or long-term capital gains
arising from an investment made by it in India, whether in the form of debt or share
capital or unit, if the investment—
(i) is made on or after the 1st day of April, 2020 but on or before the 31st day of
March, 2024;
(ii) is held for at least three years; and
(iii) is in—
(a) a business trust referred to in sub-clause (i) of clause (13A) of section 2;
or
(b) a company or enterprise or an entity carrying on the business of
developing, or operating and maintaining, or developing, operating and
maintaining any infrastructure facility as defined in the Explanation to
clause (i) of sub-section (4) of section 80-IA or such other business as the
Central Government may, by notification in the Official Gazette, specify
in this behalf; or
(c) a Category-I or Category-II Alternative Investment Fund regulated under
the Securities and Exchange Board of India (Alternative Investment
Fund) Regulations, 2012, made under the Securities and Exchange Board
of India Act, 1992 (15 of 1992), having 10[not less than fifty per cent]
investment in one or more of the company or enterprise or entity referred
to in item (b) 11[or item (d) or item (e) or in an Infrastructure Investment
Trust referred to in sub-clause (i) of clause (13A) of section 2; or]
12
[(d) a domestic company, set up and registered on or after the 1st day of
April, 2021, having minimum seventy-five per cent investments in one or
more of the companies or enterprises or entities referred to in item (b); or
(e) a non-banking financial company registered as an Infrastructure Finance
Company as referred to in notification number RBI/2009-10/316 issued
by the Reserve Bank of India or in an Infrastructure Debt Fund, a non-
banking finance company, as referred to in the Infrastructure Debt Fund -
Non-Banking Financial Companies (Reserve Bank) Directions, 2011,
issued by the Reserve Bank of India, having minimum ninety per cent
lending to one or more of the companies or enterprises or entities referred
to in item (b):]
Provided that if any difficulty arises regarding interpretation or implementation of
the provisions of this clause, the Board may, with the approval of the Central
Government, issue guidelines for the purpose of removing the difficulty:
Provided further that every guideline issued under the first proviso, shall be laid
before each House of Parliament and shall be binding on the income-tax authority
and the specified person:
Provided also that where any income has not been included in the total income of
the specified person due to the provisions of this clause, and subsequently during
any previous year the specified person fails to satisfy any of the conditions of this
clause so that the said income would not have been eligible for such non-inclusion,
such income shall be chargeable to income-tax as the income of the specified person
of that previous year:
12
[Provided also that in case a Category-I or Category-II Alternative Investment
Fund referred to in item (c) of sub-clause (iii) has investment of less than one
hundred per cent in one or more of the companies or enterprises or entities referred
to in item (b) or item (d) or item (e) of the said sub-clause or in an Infrastructure
Investment Trust referred to in item (c) of the said sub-clause, income accrued or
arisen or received or attributable to such investment, directly or indirectly, which is
exempt under this clause shall be calculated proportionately to that investment made
in one or more of the companies or enterprises or entities referred to in item (b) or
item (d) or item (e) of the said sub-clause or in the Infrastructure Investment Trust
referred to in item (c) of the said sub-clause, in such manner as may be prescribed13:
Provided also that in case a domestic company referred to in item (d) of sub-clause
(iii) has investment of less than one hundred per cent in one or more of the
companies or enterprises or entities referred to in item (b) of the said sub-clause,
income accrued or arisen or received or attributable to such investments, directly or
indirectly, which is exempt under this clause shall be calculated proportionately to
the investment made in one or more of the companies or enterprises or entities
referred to in item (b) of the said sub-clause, in such manner as may be prescribed14:
Provided also that in case a non-banking finance company registered as an
Infrastructure Finance Company or Infrastructure Debt Fund, referred to in item (e)
of sub-clause (iii), has lending of less than one hundred per cent in one or more of
the companies or enterprises or entities referred to in item (b) of the said sub-clause,
income accrued or arisen or received or attributable to such lending, directly or
indirectly, which is exempt under this clause shall be calculated proportionately to
the lending made in one or more of the companies or enterprises or entities referred
to in item (b) of the said sub-clause, in such manner as may be prescribed14:
Provided also that in case a sovereign wealth fund or pension fund has loans or
borrowings, directly or indirectly, for the purposes of making investment in India,
such fund shall be deemed to be not eligible for exemption under this clause.]
15
[Explanation 1].—For the purposes of this clause, "specified person" means—
(a) a wholly owned subsidiary of the Abu Dhabi Investment Authority which—
(i) is a resident of the United Arab Emirates; and
(ii) makes investment, directly or indirectly, out of the fund owned by the
Government of the Abu Dhabi;
(b) a sovereign wealth fund which satisfies the following conditions, namely:—
(i) it is wholly owned and controlled, directly or indirectly, by the
Government of a foreign country;
(ii) it is set up and regulated under the law of such foreign country;
(iii) the earnings of the said fund are credited either to the account of the
Government of that foreign country or to any other account designated by
that Government so that no portion of the earnings inures any benefit to
any private person;
(iv) the asset of the said fund vests in the Government of such foreign
country upon dissolution:
16
[Provided that the provisions of sub-clauses (iii) and (iv) shall not
apply to any payment made to creditors or depositors for loan taken or
borrowing for the purposes other than for making investment in India;]
(v) it does not 17[participate in the day to day operations of investee but the
monitoring mechanism to protect the investment with the investee
including the right to appoint directors or executive director shall not be
considered as participation in the day to day operations of the investee];
and
(vi) it is specified by the Central Government, by notification in the Official
Gazette, for this purpose and fulfils conditions specified in such
notification;
(c) a pension fund, which—
(i) is created or established under the law of a foreign country including the
laws made by any of its political constituents being a province, State or
local body, by whatever name called;
(ii) is not liable to tax in such foreign country 16[or if liable to tax,
exemption from taxation for all its income has been provided by such
foreign country];
(iii) satisfies such other conditions as may be prescribed18; 19[***]
20
[(iiia) it does not participate in the day to day operations of investee but
the monitoring mechanism to protect the investment with the investee
including the right to appoint directors or executive director shall not be
considered as participation in day to day operations of the investee; and]
(iv) is specified by the Central Government, by notification in the Official
Gazette, for this purpose and fulfils conditions specified in such
notification21.
22
[Explanation 2.— For the purposes of this clause,—
(i) "investee" means a business trust, or a company, or an enterprise, or an entity,
or a Category I or Category II Alternative Investment Fund, or an
Infrastructure Investment Trust or a domestic company, or an Infrastructure
Finance Company or an Infrastructure Debt Fund referred to in item (e) of
sub-clause (iii), in which the sovereign wealth fund or the pension fund, as the
case may be, has made the investment, directly or indirectly, under the
provisions of this clause;
(ii) "loan and borrowing" means—
(a) any loan taken or borrowing by a sovereign wealth fund from, or any
deposit or investment made in a sovereign wealth fund by, any person
other than the Government of the country in which the sovereign wealth
fund is set up;
(b) any loan taken or borrowing by a pension fund from or any deposit or
investment made in a pension fund by, any person but shall not include
the deposit or investment which represents statutory obligations and
defined contributions of one or more funds or plans established for
providing retirement, social security, employment, disability, death
benefits or any similar compensation to the participants or beneficiaries
of such funds or plans, as the case may be.
Explanation 3.—For the purposes of this clause, the Central Government may
prescribe23 that the method of calculation of "fifty per cent" referred to in item (c) or
"seventy-five per cent" referred to in item (d) or "ninety per cent" referred to in item
(e), of sub-clause (iii) shall be such as may be prescribed23;]
24
[(23FF)25 any income of the nature of capital gains, arising or received by a non-resident or a
specified fund, which is on account of transfer of share of a company resident in
India, by the resultant fund or a specified fund to the extent attributable to units held
by non-resident (not being a permanent establishment of a non-resident in India) in
such manner as may be prescribed25, and such shares were transferred from the
original fund, or from its wholly owned special purpose vehicle, to the resultant
fund in relocation, and where capital gains on such shares were not chargeable to
tax if that relocation had not taken place.
(a) the expressions "original fund", "relocation" and "resultant fund" shall have
the meanings respectively assigned to them in the Explanation to clause
(viiac) and clause (viiad) of section 47;
(b) the expression "specified fund" shall have the meaning assigned to it in clause
(c) of the Explanation to clause (4D) of section 10;]
(23G) [Omitted by the Finance Act, 2006, w.e.f. 1-4-2007;]
(24) any income chargeable under the heads "Income from house property" and
"Income from other sources" of—
(a) a registered union within the meaning of the Trade Unions Act, 1926 (16 of
1926), formed primarily for the purpose of regulating the relations between
workmen and employers or between workmen and workmen;
(b) an association of registered unions referred to in sub-clause (a);
(25) (i) interest on securities which are held by, or are the property of, any provident
fund to which the Provident Funds Act, 1925 (19 of 1925), applies, and any capital
gains of the fund arising from the sale, exchange or transfer of such securities;
(ii) any income received by the trustees on behalf of a recognised provident fund;
(iii) any income received by the trustees on behalf of an approved superannuation
fund;
(iv) any income received by the trustees on behalf of an approved gratuity fund;
(v) any income received—
(a) by the Board of Trustees constituted under the Coal Mines Provident Funds
and Miscellaneous Provisions Act, 1948 (46 of 1948), on behalf of the
Deposit-linked Insurance Fund established under section 3Gof that Act; or
(b) by the Board of Trustees constituted under the Employees' Provident Funds
and Miscellaneous Provisions Act, 1952 (19 of 1952), on behalf of the
Deposit-linked Insurance Fund established under section 6C of that Act;
(25A) any income of the Employees' State Insurance Fund set up under the provisions of
the Employees' State Insurance Act, 1948 (34 of 1948);
(26) in the case of a member of a Scheduled Tribe as defined in clause (25) of article 366
of the Constitution, residing in any area specified in Part I or Part II of the Table
appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States
of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura or in the areas
covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951,
issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said
paragraph 20 [as it stood immediately before the commencement of the North-
Eastern Areas (Reorganisation) Act, 1971 (81 of 1971)] or in the Ladakh region of
the State of Jammu and Kashmir, any income which accrues or arises to him,—
(a) from any source in the areas or States aforesaid, or
(b) by way of dividend or interest on securities;
(26A) 26[***]
(26AA) [***]
27
[(26AAA) in case of an individual, being a Sikkimese, any income which accrues or arises to
him—
(a) from any source in the State of Sikkim; or
(b) by way of dividend or interest on securities.
Explanation.—For the purposes of this clause "Sikkimese" shall mean—
(i) an individual, whose name is recorded in the register maintained under the
Sikkim Subjects Regulation, 1961 read with the Sikkim Subject Rules, 1961
(hereinafter referred to as the "Register of Sikkim Subjects"), immediately
before the 26th day of April, 1975; or
(ii) an individual, whose name is included in the Register of Sikkim Subjects by
virtue of the Government of India Order No. 26030/36/90-I.C.I., dated the 7th
August, 1990 and Order of even number dated the 8th April, 1991; or
(iii) any other individual, whose name does not appear in the Register of Sikkim
Subjects, but it is established beyond doubt that the name of such individual's
father or husband or paternal grand-father or brother from the same father
has been recorded in that register; or
(iv) any other individual, whose name does not appear in the Register of Sikkim
Subjects but it is established that such individual was domiciled in Sikkim on
or before the 26th day of April, 1975; or
(v) any other individual, who was not domiciled in Sikkim on or before the 26th
day of April, 1975, but it is established beyond doubt that such individual's
father or husband or paternal grand-father or brother from the same father
was domiciled in Sikkim on or before the 26th day of April, 1975;]
(26AAB) any income of an agricultural produce market committee or board constituted under
any law for the time being in force for the purpose of regulating the marketing of
agricultural produce;
(26B) any income of a corporation established by a Central, State or Provincial Act or of
any other body, institution or association (being a body, institution or association
wholly financed by Government) where such corporation or other body or
institution or association has been established or formed for promoting the interests
of the members of the Scheduled Castes or the Scheduled Tribes or backward
classes or of any two or all of them.
(a) "Scheduled Castes" and "Scheduled Tribes" shall have the meanings
respectively assigned to them in clauses (24) and (25) of article 366 of the
Constitution;
(b) "backward classes" means such classes of citizens, other than the Scheduled
Castes and the Scheduled Tribes, as may be notified—
(i) by the Central Government; or
(ii) by any State Government,
as the case may be, from time to time;
(26BB) any income of a corporation established by the Central Government or any State
Government for promoting the interests of the members of a minority community.
Explanation.—For the purposes of this clause, "minority community" means a
community notified as such by the Central Government in the Official Gazette in
this behalf;
(26BBB) any income of a corporation established by a Central, State or Provincial Act for
the welfare and economic upliftment of ex-servicemen being the citizens of India.
Explanation.—For the purposes of this clause, "ex-serviceman" means a person who
has served in any rank, whether as combatant or non-combatant, in the armed forces
of the Union or armed forces of the Indian States before the commencement of the
Constitution (but excluding the Assam Rifles, Defence Security Corps, General
Reserve Engineering Force, Lok Sahayak Sena, Jammu and Kashmir Militia and
Territorial Army) for a continuous period of not less than six months after
attestation and has been released, otherwise than by way of dismissal or discharge
on account of misconduct or inefficiency, and in the case of a deceased or
incapacitated ex-serviceman includes his wife, children, father, mother, minor
brother, widowed daughter and widowed sister, wholly dependant upon such ex-
serviceman immediately before his death or incapacitation;
(27) any income of a co-operative society formed for promoting the interests of the
members of either the Scheduled Castes or Scheduled Tribes or both referred to in
clause (26B) :
Provided that the membership of the co-operative society consists of only other co-
operative societies formed for similar purposes and the finances of the society are
provided by the Government and such other societies;
(28) [***]
(29) [Omitted by the Finance Act, 2002, w.e.f. 1-4-2003;]
(29A) any income accruing or arising to—
(a) the Coffee Board constituted under section 4 of the Coffee Act, 1942 (7 of
1942) in any previous year relevant to any assessment year commencing on or
after the 1st day of April, 1962 or the previous year in which such Board was
constituted, whichever is later;
(b) the Rubber Board constituted under sub-section (1) of section 4 of the Rubber
Board Act, 1947 (24 of 1947) in any previous year relevant to any assessment
year commencing on or after the 1st day of April, 1962 or the previous year in
which such Board was constituted, whichever is later;
(c) the Tea Board established under section 4 of the Tea Act, 1953 (29 of 1953)
in any previous year relevant to any assessment year commencing on or after
the 1st day of April, 1962 or the previous year in which such Board was
(d) the Tobacco Board constituted under the Tobacco Board Act, 1975 (4 of
after the 1st day of April, 1975 or the previous year in which such Board was
(e) the Marine Products Export Development Authority established under section
4 of the Marine Products Export Development Authority Act, 1972 (13 of
after the 1st day of April, 1972 or the previous year in which such Authority
was constituted, whichever is later;
(f) the Agricultural and Processed Food Products Export Development Authority
established under section 4 of the Agricultural and Processed Food Products
Export Development Act, 1985 (2 of 1986) in any previous year relevant to
any assessment year commencing on or after the 1st day of April, 1985 or the
previous year in which such Authority was constituted, whichever is later;
(g) the Spices Board constituted under sub-section (1) of section 3 of the Spices
Board Act, 1986 (10 of 1986) in any previous year relevant to any assessment
year commencing on or after the 1st day of April, 1986 or the previous year in
which such Board was constituted, whichever is later;
(h) the Coir Board established under section 4 of the Coir Industry Act, 1953 (45
of 1953);
28
(30) in the case of an assessee who carries on the business of growing and
manufacturing tea in India, the amount of any subsidy received from or through the
Tea Board under any such scheme for replantation or replacement of tea bushes or
for rejuvenation or consolidation of areas used for cultivation of tea as the Central
Government may, by notification in the Official Gazette, specify:
Provided that the assessee furnishes to the Assessing Officer, along with his return
of income29 for the assessment year concerned or within such further time as the
Assessing Officer may allow, a certificate from the Tea Board as to the amount of
such subsidy paid to the assessee during the previous year.
Explanation.—In this clause, "Tea Board" means the Tea Board established under
section 4 of the Tea Act, 1953 (29 of 1953);
(31) in the case of an assessee who carries on the business of growing and manufacturing
rubber, coffee, cardamom or such other commodity in India, as the Central
Government may, by notification in the Official Gazette, specify in this behalf, the
amount of any subsidy received from or through the concerned Board under any
such scheme for replantation or replacement of rubber plants, coffee plants,
cardamom plants or plants for the growing of such other commodity or for
rejuvenation or consolidation of areas used for cultivation of rubber, coffee,
cardamom or such other commodity as the Central Government may, by
notification in the Official Gazette, specify:
Provided that the assessee furnishes to the Assessing Officer, along with his return
of income29a for the assessment year concerned or within such further time as the
Assessing Officer may allow, a certificate from the concerned Board, as to the
amount of such subsidy paid to the assessee during the previous year.
Explanation.—In this clause, "concerned Board" means,—
(i) in relation to rubber, the Rubber Board constituted under section 4 of the
Rubber Act, 1947 (24 of 1947),
(ii) in relation to coffee, the Coffee Board constituted under section 4 of the
Coffee Act, 1942 (7 of 1942),
(iii) in relation to cardamom, the Spices Board constituted under section 3 of the
Spices Board Act, 1986 (10 of 1986),
(iv) in relation to any other commodity specified under this clause, any Board or
other authority established under any law for the time being in force which the
Central Government may, by notification in the Official Gazette, specify in
this behalf;
(32) in the case of an assessee referred to in sub-section (1A) of section 64, any income
includible in his total income under that sub-section, to the extent such income does
not exceed one thousand five hundred rupees in respect of each minor child whose
income is so includible;
(33) any income arising from the transfer of a capital asset, being a unit of the Unit
Scheme, 1964 referred to in Schedule I to the Unit Trust of India (Transfer of
Undertaking and Repeal) Act, 2002 (58 of 2002) and where the transfer of such
asset takes place on or after the 1st day of April, 2002;
(34) any income by way of dividends referred to in section 115-O :
Provided that nothing in this clause shall apply to any income by way of dividend
chargeable to tax in accordance with the provisions of section 115BBDA:
Provided further that nothing contained in this clause shall apply to any income by
way of dividend received on or after the 1st day of April, 2020 other than the
dividend on which tax under section 115-O and section 115BBDA, wherever
applicable, has been paid;
(34A) any income arising to an assessee, being a shareholder, on account of buy back of
shares by the company as referred to in section 115QA;
Following clause (34B) shall be inserted after clause (34A) of section 10 by the
Finance Act, 2023, w.e.f. 1-4-2024 :
(34B) any income of a unit of any International Financial Services Centre, primarily
engaged in the business of leasing of an aircraft, by way of dividends from a
company being a unit of any International Financial Services Centre primarily
engaged in the business of leasing of an aircraft.
Explanation.—For the purposes of this clause, "International Financial Services
Centre" shall have the same meaning as assigned to it in clause (q) of section 2 of
the Special Economic Zones Act, 2005 (28 of 2005);
(35) any income by way of,—
(a) income received in respect of the units of a Mutual Fund specified under
clause (23D); or
(b) income received in respect of units from the Administrator of the specified
undertaking; or
(c) income received in respect of units from the specified company:
Provided that this clause shall not apply to any income arising from transfer of
units of the Administrator of the specified undertaking or of the specified company
or of a mutual fund, as the case may be:
Provided further that nothing contained in this clause shall apply to any income in
respect of units received on or after the 1st day of April, 2020.
(a) "Administrator" means the Administrator as referred to in clause (a) of
section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act,
2002 (58 of 2002);
(b) "specified company" means a company as referred to in clause (h) of section
2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002
(58 of 2002);
(35A) any income by way of distributed income referred to in section 115TA received
from a securitisation trust by any person being an investor of the said trust :
Provided that nothing contained in this clause shall apply to any income by way of
distributed income referred to in the said section, received on or after the 1st day of
June, 2016.
Explanation.—For the purposes of this clause, the expressions "investor" and
"securitisation trust" shall have the meanings respectively assigned to them in
the Explanation below section 115TCA;
(36) any income arising from the transfer of a long-term capital asset, being an eligible
equity share in a company purchased on or after the 1st day of March, 2003 and
before the 1st day of March, 2004 and held for a period of twelve months or more.
Explanation.—For the purposes of this clause, "eligible equity share" means,—
(i) any equity share in a company being a constituent of BSE-500 Index of the
Stock Exchange, Mumbai as on the 1st day of March, 2003 and the
transactions of purchase and sale of such equity share are entered into on a
recognised stock exchange in India;
(ii) any equity share in a company allotted through a public issue on or after the
1st day of March, 2003 and listed in a recognised stock exchange in India
before the 1st day of March, 2004 and the transaction of sale of such share is
entered into on a recognised stock exchange in India;
(37) in the case of an assessee, being an individual or a Hindu undivided family, any
income chargeable under the head "Capital gains" arising from the transfer of
agricultural land, where—
(i) such land is situate in any area referred to in item (a) or item (b) of sub-clause
(iii) of clause (14) of section 2;
(ii) such land, during the period of two years immediately preceding the date of
transfer, was being used for agricultural purposes by such Hindu undivided
family or individual or a parent of his;
(iii) such transfer is by way of compulsory acquisition under any law, or a transfer
the consideration for which is determined or approved by the Central
Government or the Reserve Bank of India;
(iv) such income has arisen from the compensation or consideration for such
transfer received by such assessee on or after the 1st day of April, 2004.
Explanation.—For the purposes of this clause, the expression "compensation or
consideration" includes the compensation or consideration enhanced or further
enhanced by any court, Tribunal or other authority;
(37A) any income chargeable under the head "Capital gains" in respect of transfer of a
specified capital asset arising to an assessee, being an individual or a Hindu
undivided family, who was the owner of such specified capital asset as on the 2nd
day of June, 2014 and transfers that specified capital asset under the Land Pooling
Scheme (herein referred to as "the scheme") covered under the Andhra Pradesh
Capital City Land Pooling Scheme (Formulation and Implementation) Rules, 2015
made under the provisions of the Andhra Pradesh Capital Region Development
Authority Act, 2014 (Andhra Pradesh Act 11 of 2014) and the rules, regulations and
Schemes made under the said Act.
Explanation.—For the purposes of this clause, "specified capital asset" means,—
(a) the land or building or both owned by the assessee as on the 2nd day of June,
2014 and which has been transferred under the scheme; or
(b) the land pooling ownership certificate issued under the scheme to the
assessee in respect of land or building or both referred to in clause (a); or
(c) the reconstituted plot or land, as the case may be, received by the assessee in
lieu of land or building or both referred to in clause (a) in accordance with the
scheme, if such plot or land, as the case may be, so received is transferred
within two years from the end of the financial year in which the possession of
such plot or land was handed over to him;
(38) any income arising from the transfer of a long-term capital asset, being an equity
share in a company or a unit of an equity oriented fund or a unit of a business trust
where—
(a) the transaction of sale of such equity share or unit is entered into on or after
the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into
force; and
(b) such transaction is chargeable to securities transaction tax under that
Chapter :
Provided that the income by way of long-term capital gain of a company shall be
taken into account in computing the book profit and income-tax payable
under section 115JB :
Provided also that nothing contained in sub-clause (b) shall apply to a transaction
undertaken on a recognised stock exchange located in any International Financial
Services Centre and where the consideration for such transaction is paid or payable
in foreign currency:
Provided also that nothing contained in this clause shall apply to any income
arising from the transfer of a long-term capital asset, being an equity share in a
company, if the transaction of acquisition, other than the acquisition notified by the
Central Government in this behalf, of such equity share is entered into on or after
the 1st day of October, 2004 and such transaction is not chargeable to securities
transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004):
Provided also that nothing contained in this clause shall apply to any income
arising from the transfer of long-term capital asset, being an equity share in a
company or a unit of an equity oriented fund or a unit of a business trust, made on
or after the 1st day of April, 2018.
(a) "equity oriented fund" means a fund—
(i) where the investible funds are invested by way of equity shares in
domestic companies to the extent of more than sixty-five per cent of the
total proceeds of such fund; and
(ii) which has been set up under a scheme of a Mutual Fund specified under
clause (23D):
Provided that the percentage of equity shareholding of the fund shall be
computed with reference to the annual average of the monthly averages of the
opening and closing figures;
(b) "International Financial Services Centre" shall have the same meaning as
assigned to it in clause (q) of section 2 of the Special Economic Zones Act,
2005 (28 of 2005);
(c) "recognised stock exchange" shall have the meaning assigned to it in clause
(ii) of the Explanation 1 to sub-section (5) of section 43;
(39) any specified income, arising from any international sporting event held in India, to
the person or persons notified by the Central Government in the Official Gazette, if
such international sporting event—
(a) is approved by the international body regulating the international sport
relating to such event;
(b) has participation by more than two countries;
(c) is notified by the Central Government in the Official Gazette for the purposes
of this clause.
Explanation.—For the purposes of this clause, "the specified income" means the
income, of the nature and to the extent, arising from the international sporting event,
which the Central Government may notify in this behalf;
(40) any income of any subsidiary company by way of grant or otherwise received from
an Indian company, being its holding company engaged in the business of
generation or transmission or distribution of power if receipt of such income is for
settlement of dues in connection with reconstruction or revival of an existing
business of power generation:
Provided that the provisions of this clause shall apply if reconstruction or revival of
any existing business of power generation is by way of transfer of such business to
the Indian company notified under sub-clause (a) of clause (v) of sub-section (4)
of section 80-IA;
(41) 30[***]
(42) any specified income arising to a body or authority which—
(a) has been established or constituted or appointed under a treaty or an
agreement entered into by the Central Government with two or more countries
or a convention signed by the Central Government;
(b) is established or constituted or appointed not for the purposes of profit;
of this clause.
Explanation.—For the purposes of this clause, "specified income" means the
income, of the nature and to the extent, arising to the body or authority referred to in
this clause, which the Central Government may notify in this behalf;
(43) any amount received by an individual as a loan, either in lump sum or in instalment,
in a transaction of reverse mortgage referred to in clause (xvi) of section 47;
(44) any income received by any person for, or on behalf of, the New Pension System
Trust established on the 27th day of February, 2008 under the provisions of the
Indian Trusts Act, 1882 (2 of 1882);
(45) [***]
(46) any specified income arising to a body or authority or Board or Trust or
Commission (by whatever name called) 31[other than those covered under clause
(46A)], or a class thereof which—
(a) has been established or constituted by or under a Central, State or Provincial
Act, or constituted by the Central Government or a State Government, with
the object of regulating or administering any activity for the benefit of the
general public;
(b) is not engaged in any commercial activity; and
of this clause.
Explanation.—For the purposes of this clause, "specified income" means the
income, of the nature and to the extent arising to a body or authority or Board or
Trust or Commission (by whatever name called) 31[other than those covered under
clause (46A)], or a class thereof referred to in this clause, which the Central
Government may, by notification in the Official Gazette, specify in this behalf;
Following clauses (46A) and (46B) shall be inserted after clause (46) of section
10 by the Finance Act, 2023, w.e.f. 1-4-2024 :
(46A) any income arising to a body or authority or Board or Trust or Commission, not
being a company, which—
(a) has been established or constituted by or under a Central Act or State Act
with one or more of the following purposes, namely:--
(i) dealing with and satisfying the need for housing accommodation;
(ii) planning, development or improvement of cities, towns and villages;
(iii) regulating, or regulating and developing, any activity for the benefit of
the general public; or
(iv) regulating any matter, for the benefit of the general public, arising out
of the object for which it has been created; and
(b) is notified by the Central Government in the Official Gazette for the purposes
of this clause;
(46B) any income accruing or arising to,—
(i) National Credit Guarantee Trustee Company Limited, being a company
established and wholly financed by the Central Government for the purposes
of operating credit guarantee funds established and wholly financed by the
Central Government; or
(ii) a credit guarantee fund established and wholly financed by the Central
Government and managed by the National Credit Guarantee Trustee
Company Limited; or
(iii) Credit Guarantee Fund Trust for Micro and Small Enterprises, being a trust
created by the Government of India and the Small Industries Development
Bank of India established under sub-section (1) of section 3 of the Small
Industries Development Bank of India Act, 1989 (39 of 1989);
(47) any income of an infrastructure debt fund, set up in accordance with the guidelines
as may be prescribed,32 which is notified by the Central Government in the Official
Gazette for the purposes of this clause;
(48) any income received in India in Indian currency by a foreign company on account
of sale of crude oil, any other goods or rendering of services, as may be notified by
the Central Government in this behalf, to any person in India:
Provided that—
(i) receipt of such income in India by the foreign company is pursuant to an
agreement or an arrangement entered into by the Central Government or
approved by the Central Government;
(ii) having regard to the national interest, the foreign company and the agreement
or arrangement are notified by the Central Government in this behalf; and
(iii) the foreign company is not engaged in any activity, other than receipt of
such income, in India;
(48A) any income accruing or arising to a foreign company on account of storage of crude
oil in a facility in India and sale of crude oil therefrom to any person resident in
India:
Provided that—
(i) the storage and sale by the foreign company is pursuant to an agreement or an
arrangement entered into by the Central Government or approved by the
Central Government; and
(ii) having regard to the national interest, the foreign company and the agreement
or arrangement are notified by the Central Government in this behalf;
(48B) any income accruing or arising to a foreign company on account of sale of leftover
stock of crude oil, if any, from the facility in India after the expiry of the agreement
or the arrangement referred to in clause (48A) or on termination of the said
agreement or the arrangement, in accordance with the terms mentioned therein, as
the case may be, subject to such conditions as may be notified by the Central
Government in this behalf;
(48C) any income accruing or arising to the Indian Strategic Petroleum Reserves Limited,
being a wholly owned subsidiary of the Oil Industry Development Board under the
Ministry of Petroleum and Natural Gas, as a result of arrangement for replenishment
of crude oil stored in its storage facility in pursuance of directions of the Central
Government in this behalf:
Provided that nothing contained in this clause shall apply to an arrangement, if the
crude oil is not replenished in the storage facility within three years from the end of
the financial year in which the crude oil was removed from the storage facility for
the first time;
32a
[(48D) any income accruing or arising to an institution established for financing the
infrastructure and development, set up under an Act of Parliament and notified by
the Central Government for the purposes of this clause, for a period of ten
consecutive assessment years beginning from the assessment year relevant to the
previous year in which such institution is set up;
(48E) any income accruing or arising to a developmental financing institution, licensed by
the Reserve Bank of India under an Act of the Parliament referred to in clause
(48D) and notified by the Central Government for the purposes of this clause, for a
period of five consecutive assessment years beginning from the assessment year
relevant to the previous year in which the developmental financing institution is set
up :
Provided that the Central Government may, by issuing notification under this
clause, extend the period of exemption under this clause for a further period, not
exceeding five more consecutive assessment years, subject to fulfilment of such
conditions as may be specified in the said notification;]
33
(49) [***]
(50) any income arising from any specified service provided on or after the date on which
the provisions of Chapter VIII of the Finance Act, 2016 comes into force or arising
from any e-commerce supply or services made or provided or facilitated on or after
the 1st day of April, 33a[2020] and chargeable to equalisation levy under that
Chapter.
33b
[Explanation 1.—For the removal of doubts it is hereby clarified that the income
referred to in this clause shall not include and shall be deemed never to have been
included any income which is chargeable to tax as royalty or fees for technical
services in India under this Act read with the agreement notified by the Central
Government under section 90 or section 90A.
Explanation 2.—For the purposes of this clause,—
(i) "e-commerce supply or services" shall have the meaning assigned to it in
clause (cb) of section 164 of the Finance Act, 2016 (28 of 2016);
(ii) "specified service" shall have the meaning assigned to it in clause (i) of
section 164 of the Finance Act, 2016 (28 of 2016).]

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CHAPTER III

INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME

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